Agencies will have to give their views to FIPB within stipulated time
In a bid to fast track foreign direct investment (FDI) projects, the government plans to fix a time frame for ministerial approvals required for the Foreign Investment Promotion Board’s (FIPB’s) final nod. Several FDI proposals are on hold because of the delays in clearances from various government agencies.
?Normally proposals that require clearances from the ministries of home affairs and defence take a long time to be approved. This results in repeated deferrals of proposals, giving out a signal that procedures to bring in FDI in India is cumbersome,? said a government official requesting anonymity. ?Similar is the case with some other ministries where clearance processes are taking longer than desired.?
The changes would fast-track the approval process as specific time frames would be given to ministries within which they would have to give their views. In case ministries need more time, they would have to seek FIPB’s permission.
Finance minister P Chidambaram in his maiden press statement on August 6, said the government must remove any apprehension or distrust in the minds of investors. He promised that the proposals pending with the FIPB will be processed and decisions will be taken ?expeditiously?. The key message was to signal the potential investors that undue delays and complicated procedures will be streamlined soon.
One of the major cases pointing towards such delays are proposals like Mauritius-based Ambrose, which proposed to buy 40% stake in Sutures India for Rs 199 crore. The proposal was stuck since January and got approval only on August 24, the last FIPB meeting. Similar was the fate of Spain’s Chemo Group’s plans to buy a 100% stake in Ordain Healthcare Global for Rs 58 crore. The proposal finally got cleared in the last FIPB meeting.
Sources suggest such delays will be a thing of the past as apart from formulating the specific time lines, the FIPB will meet at regular intervals, at least once every month, and the communication sent out to companies facing delays due to regulatory and ministerial clearances will also be clearer.
The delays caused also go against the spirit of the FIPB as the board was formed to offer a single-window clearance for FDI proposals that are not allowed access through the automatic route. FIPB on its website says that it has a strong record of actively encouraging the flow of FDI into the country through speedy and transparent processing of applications, and providing on-line clarification.
The finance ministry considers the FIPB’s recommendations on proposals for foreign investment of up to Rs 1,200 crore. In case of ambiguity or a conflict of interpretation, the FIPB is expected to step in with an investor-friendly approach.