FIPB phase-out: A bold and welcome move – or is it?

In his 2017-18 budget speech, Finance Minister Arun Jaitley announced the decision to phase out the Foreign Investment Promotion Board (FIPB) by 2018. He stated that after the government’s substantial reforms to the foreign direct investment (FDI) policy over the past two years, more than 90% of India’s total FDI inflows were under the automatic route, and that the phasing out of the FIPB would be accompanied by further liberalization of the FDI policy.

The Ministry of Commerce and Industry welcomed the announcement, saying it was aimed at facilitating the ease of doing business in India and that the ministries in charge of the sectors in which FDI is under the approval route are competent to screen FDI applications and handle investment proposals.

The FIPB, an inter-ministerial body, offers a single-window clearance for all FDI applications under the approval route. At present, prior FIPB approval is required for FDI in about 14 sectors and about 10 different government ministries and departments are involved.