Briefing reporters, Minister for Commerce and Industry Anand Sharma said that this relaxation in the FDI policy, which was cleared by the Cabinet Committee of Economic Affairs (CCEA), will further liberalise norms and expedite foreign investment inflow into the country, adding that only proposals involving total foreign equity inflows of more than Rs 1,200 crore would be placed for consideration of the CCEA.
The recommendations of FIPB on proposals with total foreign equity inflow of and below Rs 1,200 crore will be considered by the Finance Minister for approval, he said. Currently, the total project cost, including the foreign equity inflow is taken into consideration for sending the proposal to CCEA.
Under the new rules, proposals involving investments in far excess of Rs 600 crore would get a faster approval, as the Rs 1,200 crore limit is not on total project investment but on equity component, Sharma explained.
This will enable more efficient functioning and reduce regulatory burden on foreign companies, expediting the flow of investments, he added.
As the investment limit has not been revised since 1996, it was felt that the FDI policy should be further relaxed to encourage inflow of FDI, a senior official of the Department of Industrial Policy and Promotion said.
As per the revised FDI policy companies, which have obtained prior approval from the government for the initial foreign investment, and fall under the automatic route will not have to seek for fresh approval, Sharma said.
Referring to efforts being made by the government to further simplify the FDI policy, Sharma said all policy related issues relating to the FDI would be put in a comprehensive study from by March 31 this year to bring about “more clarity and simplification”.
Exports grow 11.5 per cent in January
Growing for the third month in a row, exports in January jumped 11.5 per cent to US$14.3 billion on the back of demand revival in the US and Europe.
Commerce & Industry Minister Anand Sharma said “between now and March 31, we hope to maintain and further strengthen the growth, which will help us in registering healthy export figures and reducing gap.In January 2009 exports stood at US$12.9 billion.
However, it is still early to feel upbeat as some sectors are still struggling to come out of the bad phase. Sharma said engineering goods, textiles, jute, carpets, handicrafts and leather “continue to do badly” and are a cause of concern.
He further said that though there has been recovery in global economy “it will take time for the demand (for Indian goods) to return to pre-recession level”.