Govt may phase out Foreign Investment Promotion Board soon

In a bid to further ease the process of approving investments and introducing new instruments, the government may do away with the Foreign Investment Promotion Board, a Times of India report has said. 

The FIPB was set up 25 years ago when India opened its gates to the world under its economic liberalisation policy. Currently, the FIPB acts as a single window clearance for Foreign Direct Investment (FDI) applications under the approval route. 

The sectors which allow for FDI in automatic route do not need any prior approval from FIPB and are only subject to sector-specific laws. 

The government is working on allowing foreign investments into more sectors under the automatic route, which means the FIPB may eventually be phased out, the report says. 

After this, the Reserve Bank of India will act as the gatekeeper under foreign Exchange Management Act (FEMA) while the invigilators for the other sectors will be the sectors' regulators, economic affairs secretary Shaktikanta Das told TOI in an interview. 

The FIPB was put into place in 1991, when there was an approval needed in most of the sectors for foreign investments and the process was overlooked by the Prime Minister's Office directly, the report said. 

Now, applications to FIPB for approval has been taken online, which means the North Block office in New Delhi for approvals is almost always empty, Das said.