Government in its effort to further ease doing business in India, has clarified that the approval of the Foreign Investment Promotion Board (FIPB) will not be required for mergers and acquisitions (M&As) in sectors where foreign direct investment (FDI) is allowed under automatic route. Currently, foreign investment is permitted either through the automatic route or the government approval route. The FIPB, which is an inter-ministerial body, clears investment proposals of up to Rs 3,000 crore, while those proposals involving investment of more than Rs 3,000 crore are given final clearance by the Cabinet Committee on Economic Affairs (CCEA).
A new FDI circular was issued by the Department of Industrial Policy and Promotion (DIPP) as several corporates were confused on the issue and in the process the flow of investment was being delayed.
The circular also said that government permission will not be required for issuing ESOPs (employees stock option plans) in sectors under automatic route. Currently, foreign investment is permitted either through the automatic route or the government approval route. During the April-February period of 2014-15, FDI grew by 39 per cent year-on-year to $28.81 billion. The government has recently taken several steps including reduction in number of approvals and clearances to improve ease of doing business in the country and attract domestic and foreign investments.