FIPB can now OK FDI up to Rs 3,000 crore, says CCEA

FIPB can now OK FDI up to Rs 3,000 crore, says CCEA

 The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi on Wednesday allowed the Foreign Investment Proposal Board (FIPB) to clear foreign investment proposals up to Rs 3,000 crore. Earlier, FIPB could clear proposals only up to Rs 1,200 crore. This will make it less cumbersome for foreign players to push investment into the country.

Recently, the Department of Industrial Policy and Promotion (DIPP) had floated a draft cabinet note with the proposal to increase the threshold of FIPB approval. Currently, if a foreign company has to invest in India, approval from FIPB is needed for amounts below Rs 1,200 crore. Anything above that is ratified by the CCEA.

An official statement said most of the sectors are presently under the automatic route, under which only RBI intimation is required and FIPB/CCEA approvals are not required. There’s no limit for foreign investment under the automatic route.

Cabinet approves DTAC

The Union Cabinet on Wednesday gave its approval for revising the Double Taxation Avoidance Convention (DTAC) which was signed in 1985, between India and the Republic of Korea (South Korea), for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.

The revised DTAA provides for source-based taxation of capital gains, and has provisions for making adjustments to profits of associated enterprises on the basis of arm’s length principle. It also provides for residence-based taxation of shipping income, and provisions for service of permanent establishment (PE). It also  rationalises tax rates in the articles on dividends, interest and royalties, and fees for technical services.

Food Park guidelines

The CCEA on Wednesday also approved the modification in the Mega Food Park Scheme guideline for food processing. These modifications are expected to streamline the implementation of the scheme.

The scheme will be implemented in a market-driven manner. Innovative supply chain management will be the key to implementation of this scheme. Project proposals for focusing on the processing and preservation of perishable food products would be given weightage in selection.

Each Mega Food Park is expected to benefit 6,000 farmers/producers directly and about 25,000 farmers indirectly, the official statement said. As per the scheme, ownership and management of the Mega Food Park vests with an SPV (special purpose vehicle) in which organised retailers, processors, service providers etc. may be equity holders, or  an anchor investor.

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