JOIN USThe government on Friday set up a committee under a senior finance ministry official to create a new mechanism to approve foreign investments (FI) in the wake of the recent decision to abolish the Foreign Investment Promotion Board (FIPB).
“The committee under Saurabh Garg, Joint Secretary, Department of Economic Affairs, will come up with a new mechanism in six to eight weeks. In between at least two meetings of FIPB are likely to take place,” a government official said.
Finance Minister Arun Jaitley in his Budget speech for 2017-18 had proposed abolition of FIPB since more than 90% approvals had turned automatic.
“Under the new mechanism, things will be simpler. A clearing board will be made under the ministries concerned or departments to approve FDI proposals directly,” the official said.
Currently, sectors like defence, telecommunications, financial services, retail and pharmaceuticals need approvals from FIPB.
Phasing out of FIPB is likely to improve ease of doing business as FIPB, at present, takes six months or more to approve a deal.
Informed sources said FIPB may eventually be merged with the Department of Industrial Policy and Promotion (DIPP) to formulate a comprehensive foreign direct investment policy.
FIPB, which has started meeting twice every month since 2015, was created under the Prime Minister’s Office in the wake of economic liberalisation in the 1990s.
The committee is expected to lay down a roadmap on the post FIPB scenario. The recommendations will be submitted for the government’s consideration by the beginning of the new financial year in April, the official said.
He said FIPB will not only boost ease of doing business but also simplify procedures.