ABOLITION OF FOREIGN INVESTMENT PROMOTION BOARD
The Foreign Investment Promotion Board (FIPB), a 25 year old institution that offered a single window clearance for all foreign direct investment (FDI) in India, under the approval route, has now been abolished. The Union Cabinet has now cleared the dismantling of the FIPB on 24 May 2017 in keeping with the declaration made by the Finance Minister during the presentation of the Union Budget.
Following is a brief summary of the legal ramifications of the abolition of the FIPB:
- FDI proposals that must comply with the approval route shall now be cleared by the concerned government ministry instead of the FIPB;
- FDI proposals, pending before the FIPB shall now be sent to the concerned ministries for approval;
- The approvals will now have to be approved in a time bound manner;
- Rejection by the department concerned has been made difficult as it will now mandatorily require concurrence of the Department of Industrial Policy and Promotion (DIPP);
- A standard operating procedure (SOP) will be issued by the DIPP for facilitating the processing FDI applications;
- All FDI from Pakistan and Bangladesh and FDI proposals requiring approval in private security agencies and manufacture of small arms have to be approved by the ministry of home affairs.
The abolition is in line with governments' aim of improving the ease of doing business in India. This will certainly streamline and accelerate the process of FDI proposals as it shall now be approved by the concerned ministries themselves, instead of unconnected officers at the FIPB. However, much will depend on the alternate FDI approval plan, to be notified by the Government.
This update was released on 26 May 2017.
Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
Advocates, Solicitors and Notaries
T: +91 22 40565252
Mumbai Office: Surya Mahal, 2nd Floor, 5, Burjorji Bharucha Marg, Fort, Mumbai-400 023, India
Delhi Office: Block C-9, Lower Ground Floor, Jangpura Extension, New Delhi - 110 014, India
"Noted lawyer in the Real Estate practitioner from India" - Chambers & Partners
Please consider the environment before printing this email
The information contained in this communication is intended solely for the use of the individual or entity to whom it is addressed and others authorized to receive it. This communication may contain confidential or legally privileged information. If you are not the intended recipient, any disclosure, copying, distribution or action taken relying on the contents is prohibited and may be unlawful. If you have received this communication in error, or if you or your employer does not consent to email messages of this kind, please notify the sender immediately by responding to this email and then delete it from your system. No liability is accepted for any harm that may be caused to your systems or data by this message.
Subscribe to our Knowledge Repository
If you would like to receive content directly in your inbox from our knowledge repository, please complete this subscription form.