The applications — on foreign direct investment (FDI) in India in sectors under the approval route — considered by the inter-ministerial Foreign Investment Promotion Board (FIPB) will soon be taken up by the concerned ministries and sectoral regulators, according to Commerce and Industry Minister Nirmala Sitharaman.
The Centre had, in the Budget 2017-18, proposed that the FIPB — which offered a single window clearance mechanism for FDI applications in sectors under the approval route – will be abolished in FY’18.
Talking to reporters, Ms. Sitharaman said more than 92% of the FDI inflows were through the automatic route. “For the rest of the FDI (about 8% of the total FDI inflows), every department concerned has a framework or a regulator for it. If there is an arm’s-length regulator for the department concerned, it is sufficient to take care of the screening and approval of such investment proposals.” She added, “(such) regulators of the respective ministries are more than adequately endorsed to take care of screening such applications.”
Maximum governance
Elaborating, she said, “In keeping in line with the government’s policy of maximum governance and minimum government, we have taken the FIPB to the logical conclusion, which was to wind it up. The whole idea was to make doing business in India easier. Now that majority of the investments coming in are through the automatic route, a superfluous or an additional layer in the form of FIPB is not any longer required.”
In his FY’18 Budget speech, Finance Minister Arun Jaitley had said: “We have now reached a stage where FIPB can be phased out. We have therefore decided to abolish the FIPB in 2017-18. A roadmap for the same will be announced in the next few months. In the meantime, further liberalisation of FDI policy is under consideration and necessary announcements will be made in due course.” Economic Affairs Secretary Shaktikanta Das, who heads the FIPB, had said the government is likely to bring in within two months a new mechanism to replace the high-level inter-ministerial panel.
On the proposal by American multinational technology major Apple for establishing a manufacturing unit in India for products, including iPhones and iPads, the Centre said it had so far not taken the final call. It said whenever a policy decision is taken on the matter it will be applicable to the entire sector and not just one company.
Ramesh Abhishek, Secretary, Department of Industrial Policy and Promotion (DIPP) — the nodal agency on FDI issues – told reporters, “The government doesn’t make any policy or take a policy decision for a particular company. When a decision is taken, it will be applicable for everyone. It will be good for the sector.”
On January 25, a high-level panel — including officials from the Departments of Industrial Policy and Promotion, Commerce and Revenue — had heard out Apple’s demands including tax and duty concessions to help it go ahead with its ‘Make In India’ plans. Sources said though there were more than 40 companies manufacturing mobile phones in the country, none of them had sought similar concessions – including easing labelling and local sourcing norms – for starting manufacturing in the country and therefore the government will not be able to relax rules only for Apple.
Mr. Abhishek said: “No ministry has yet taken a final decision on any of those. But we (DIPP) are in touch with them. From the DIPP (point of view), it is not a question of our support (to Apple’s proposal). Definitely we are supporting all manufacturing, including high value manufacturing. We are coordinating response from all the concerned ministries and departments (on Apple’s proposal) but no final view has been taken.”
