The government on Friday notified the liberal FDI rules for implementation under which the finance minister can clear proposals up to Rs 1,200 crore foreign equity without seeking an approval of the Cabinet Committee on Economic Affairs.
The department of industry policy and promotion (DIPP) has notified the changes in the Foreign Direct Investment (FDI) rules on Friday.
Now, the FDI proposals up to the threshold of Rs 1,200 crore would be considered by the Foreign Investment Promotion Board (FIPB). Earlier, such proposals above Rs 600 crore were referred to the Cabinet Committee of Economic Affairs. While the FIPB gives its recommendations, the final clearance is given by the finance minister.
The new FDI norm was approved on February 11 by the CCEA, which would now consider cases of foreign equity above Rs 1,200 crore.
According to the DIPP Press Note, cases below Rs 1,200 crore can be referred to the CCEA in special cases by the FIPB or the finance minister. Though, for special circumstances which relate to certain issues like national security . Besides, foreign investors need not seek fresh approvals from the government or FIPB in sectors that have been transferred to the automatic route or where FDI caps have been removed and also for additional investment.
With the policy relaxation, the foreign companies will not be required to obtain no-objection certificates from domestic firms for a second time for raising investment in the ongoing projects.
As per the Press Note 1 of 2005, foreign companies needed NOC from their domestic partners for taking up activities in the same sector through joint venture or technical collaboration with other entities.