1. What is FIPB? The 25-year-old Foreign Investment Promotion Board that the government has decided to abolish

What is FIPB? The 25-year-old Foreign Investment Promotion Board that the government has decided to abolish

During the budget speech for the 2017-18 session, on February 1, Finance Minister Arun Jaitley had announced the scrapping of the 25-year-old inter-ministerial body.

By: | Published: May 24, 2017 7:44 PM
The job of the FIPB was to vet Foreign Direct Investment (FDI) proposals in India which went on the government’s approval route. (Express Photo)

The Union Cabinet has approved the abolition of the Foreign Investment Promotion Board. During the budget speech for the 2017-18 session, on February 1, Finance Minister Arun Jaitley had announced the scrapping of the 25-year-old inter-ministerial body. FIPB comes under the purview of the finance ministry’s department of economic affairs. It was first constituted under the PM office during the process of economic liberalisation in the early 1990s. The job of the FIPB was to vet Foreign Direct Investment (FDI) proposals in India which went on the government’s approval route. It had the power to consider and recommend FDI. In the process of making recommendations, the FIPB provided inputs for FDI policy-making.India has opened up many sectors to enable foreign companies to set up shop in India, and that had reduced the utility of the FIPB.

FIPB, a national agency of Government of India, offered a single window clearance for applications on FDI in India. The sectors which came under the automatic method did not require any prior approval from FIPB and were subject to only sectoral laws. Secretary, Department of Economic Affairs, Ministry of Finance was the chairman of the board which consisted of 1. Secretary to Government, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, 2. Secretary to Government, Department of Commerce, Ministry of Commerce & Industry, 3. Secretary to Government, Economic Relations, Ministry of External Affairs, 4. Secretary to Government, Ministry of Overseas Indian Affairs. The Board was empowered to co-opt other Secretaries to the Central Government and top officials of financial institutions, banks and professional experts of Industry and Commerce, as and when necessary.

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The Minister of Finance who has been in charge of FIPB would consider the recommendations of FIPB on proposals with total foreign equity inflow of and below Rs. 3000 crore. The recommendations of FIPB on proposals with total foreign equity inflow of more than Rs. 3000 crore would be placed for consideration of Cabinet Committee on Economic Affairs (CCEA).

An e-filing facility was an important initiative of the FIPB Secretariat to further enhance its efficiency and transparency of decision making. It had revamped its portal to an upgraded and more secure version. The FIPB portal offered additional features such as, e-communication, quicker processing, reduced paperwork, SMS/email alert and more.

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In order to use an online application form, users had to register with the portal. Once the e-filing of an FDI proposal got completed, the application was needed to be filed or couriered with one copy of the printed version of the online application, along with the duly authenticated copy of the documents attached with the application.

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Aircel-Maxis case: Recently the board was in the news because properties of former Union Finance minister P Chidambaram and his son Karti were raided by CBI officials in connection with alleged favours granted in FIPB clearance to a firm. Even the Enforcement Directorate (ED) was probing several aspects of FIPB approval given to Aircel-Maxis including the role of Chidambaram under anti-money laundering laws.

Meanwhile, currently, FDI in 11 sectors including defence and retail trading require government approval, PTI reported.

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