About 40 per cent of foreign investment proposals go through the automatic route of the Reserve Bank of India now, while 60 per cent go through the Project Approval Board. Under the new arrangement, only 1 per cent to 2 per cent of projects will need FIPB approval, Prasad said.

Elaborating on the enhanced automatic route, Prasad said that in the event of projects having undergone appraisal by a financial institution, additional clearance by the Foreign Investment Promotion Board (FIPB) will not be necessary. The institution in its appraisal will have to look into the cost-payment schedule, which will obviate the need for any further technology-importclearance, he said.

Those companies' proposals that have not been vetted by a financial institution but have a three- to five-year profit and dividend record will also be allowed to sail through the automatic stream, Prasad said. For state-run firms which venture into joint ventures, no further assessment will be required for import of technology, he added.

``We are now entering the last decimal point of liberalisation, where only six areas remain under industry licensing,'' he said. In such a regime, the FIPB will wither away, he added. The role of the FIPB, too, will have to undergo a change. As joint ventures undergo changes in equity, it will study these developments and clear them, the secretary said.

Prasad said the government had also decided to set up a statutory regulatory body for the petroleum sector and an umbrella legislation to reduce the `nuisance level' of various inspectors that factories have to suffer. There is a new regulatory statutory authority on the anvil for the petroleumsector, where mega projects have to appraised and cleared. This agency will look into the risk-return questions and decide on issues of investor and customer interest, Prasad announced.

The umbrella legislation is envisaged to reduce the level of inspector interference. Two committees will be formed at the state level, one under the chief secretary and the other under a district collector, which will have `overriding authority' over several state statutes. Currently nearly 30 inspectors visit a factory in a month; under the new law, their arbitrariness will be streamlined. ``It will be possible to ensure that all inspectors visit the factory on one day, so that managerial concentration is not dissipated,'' Prasad said.

Meanwhile, foreign direct inflow into the country between January and August was Rs 7,245 crore compared with Rs 8,398 crore in the year-ago period. Prasad said that there were some large proposals with the Cabinet Committee on Foreign Investment, which, when sanctioned, will show a higherdirect investment level than in 1997.

About 22 per cent of sanctions translate into actual investments, the secretary said when asked about the actual inflow. The sanctioned amount does not always translate into investment as a large number of companies take contingency approvals. A large number of telecom companies had taken investment approvals in the hope that they would get licences; these sanctions did not translate into investments.

Prasad said that industrial recovery was under way and that industrial production would touch 7 to 8 per cent in the current year. He cited a ICICI study, according to which both the sales turnover and the level of net profit for 434 companies, which account for 40 per cent of market capitalisation is up. Sales is up by 12.3 per cent and net profit is up by 24.2 per cent.