In a step forward to improve ease of doing business, Economic Affairs Secretary Shaktikanta Das has said that the government hopes to put in place a new mechanism which will replace the existing Foreign Investment Promotion Board (FIPB) within couple of months. Das also said that they will come out with a revised mechanism and the powers will be delegated to the regulators or to the individual ministries or department for dealing with remaining 10% FDI proposal which requires government approval. Das added the government is working on the modality of how the power of approval will be delegated.
Finance Minister Arun Jaitley in the budget speech announced the abolition of the FIPB and said that over 90% of the foreign investment approvals are coming through the automatic route and only 10% go to the Board. Jaitley also said that FIPB has successfully implemented e-filing and online processing of FDI applications. They have now reached a stage where FIPB can be phased out and therefore decided to abolish the FIPB in 2017-18. He added that roadmap for abolishing FIPB will be announced in the next few months.
At present, FIPB offers single-window clearance for applications on FDI in India that are under the approval route. The sectors under automatic route do not require any prior approval and are subject to only sectoral laws. During April-September of the current financial year, FDI into the country increased by 30% to $21.62 billion. Last year, the government relaxed FDI policy for several sectors including defence, civil aviation and stock exchanges.