While presenting the Union Budget yesterday (01/02/2016), Finance minister, Arun Jaitley said that the Foreign Investment Promotion Board (FIPB) will soon be abolished by the Government of India. The reason being that the FIPB has had the final say in approving Foreign Direct Investment (FDI) proposals in the country for far too long. The Finance minister (in consultation with the PM) will now be in charge of approving FDI proposals. The FIPB’s powers had been considerably reduced ever since the BJP government was elected to power in 2015. Presently, the Finance Minister considers the recommendations of FIPB on proposals with total foreign equity inflow below Rs. 3000 crores and the recommendations of FIPB on proposals with total foreign equity inflow greater than Rs. 3000 crores is given for consideration to the Cabinet Committee on Economic Affairs (CCEA). Read more on Union Budget
During the last two years, the Government of India has made major FDI policy reforms in a number of sectors, including defense, construction development, insurance, pension sector, broadcasting sector, tea, coffee, rubber, cardamom, palm oil tree and olive oil tree plantations, single brand retail trading, manufacturing sector, limited liability partnerships, civil aviation, credit information companies, satellites establishment and operation and asset reconstruction sectors.
Incoming FDI grew by 27 percent during the first seven months of 2016 to US $27.82 billion, from US $21.87 billion during the same period, a year ago (2015). This growth in FDI happened because the Government of India made a strong pitch abroad to ‘Make in India’ to make India the manufacturing hub of the world so that it would in turn create plenty of job opportunities in India, leading to better standards of living. Services, telecom, trading, computer hardware and software and automobiles were among the major sectors that attracted FDIs during 2016. The Government of India has taken and is taking various measures to make India an attractive destination for investors. It has also taken measures to make doing business in India, easy.
We have to agree with the Finance minister, Arun Jaitley. Any single government organization like FIPB cannot have the final say when it comes to approving large FDI proposals. It has to be done by the Cabinet Ministers (in consultation with the PM). It can perhaps approve minor FDI proposals (FDI proposals below Rs. 1000 crores), as it does now. A total abolishment of the organization perhaps wasn’t necessary. Overall, the Government of India has done a good job in promoting FDIs in India, leading to more job opportunities and better standards of living. Sabke Saath Sabhka Vikas. Read more on Startup News