MAJOR DECISION: Doing business made easier, says Jaitley –
New Delhi: In a major decision aimed at further easing doing business in India, the Union cabinet on Wednesday abolished the 25-year-old Foreign Investment Promotion Board (FIPB), obviating the need for prior clearance for foreign direct investment in more than 90 per cent cases.
Announcing the decision, Finance Minister Arun Jaitley told reporters here that after Wednesday’s move, only 11 sectors would require prior approval for foreign direct investments (FDI).
“The cabinet today (Wednesday) took the important decision of abolishing the FIPB,” Jaitley told reporters after the cabinet meeting.
He said this was done to further ease doing of business in the country.
Explaining the rationale behind the decision, the minister said that after the liberalisation of FDI rules, 91-95 per cent of FDI was coming in anyway through the “automatic” route, without needing FIPB clearance.
The Union Budget 2017-18 presented in February had announced the proposal for abolition of FIPB.
He also said that in the case of the 11 sectors that need prior approval for FDI, these would now be given by the ministries concerned.
Wherever there are security considerations, the home minister’s approval would also be taken, he added.
Asked about how long the process of abolition would take, Jaitley said this would be done expeditiously.
Cases pending for approval with the FIPB would now be taken up by the respective ministries, the finance minister clarified.
The FIPB was set up in the early 1990s as an inter-ministerial single-window for allowing FDIs that need government approval.
The government relaxed FDI norms in June 2016 in single brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products, whereby investors in these sectors do not need to seek approval from the FIPB.
The cabinet also approved a long-awaited policy to boost local defence manufacturing by effectively picking industry champions that would tie up with foreign players and make high-tech defence equipment. Prime Minister Narendra Modi has vowed to end India’s role as the world’s largest arms importer by getting foreign firms to impart technology to local players and then manufacture in India.
Under the “Strategic Partnership” model, the government will shortlist and then pick Indian companies to join forces with foreign firms to supply fighter jets, helicopters, armoured vehicles and submarines.
“For each platform, one private sector strategic partner will be chosen,” Defence Minister Arun Jaitley told reporters after the cabinet’s Committee on Security cleared the policy.
He said the policy was designed to encourage manufacturing by assuring the selected companies of future orders. “You don’t set up a manufacturing facility if you don’t have any hope of getting orders,” he said.
Government and industry representatives have been haggling over the details of the model for more than a year, delaying the launch of tens of billions of dollars worth of deals.
Indian firms Larsen & Toubro, Mahindra Group, Tata Group and recent entrants Reliance Group and Adani Group are all expected to compete fiercely to become one of four strategic partners.
Foreign manufacturers such as Lockheed Martin, Boeing, BAE Systems, Airbus and Saab are looking to India as one of the biggest sources of future growth. — IANS