Govt abolishes FDI clearance body FIPB after 25 years

The Ministry of Finance on Wednesday abolished the Foreign Investment Promotion Board or FIPB after almost 25 years. The FIPB was initially constituted under the Prime Minister's Office in the wake of the economic liberalization drive of the early 1990s.

Earlier in February, Finance Minister Arun Jaitley had announced that the FIPB would be abolished in financial year 2017-18. The Finance Minister was speaking in the Lok Sabha during annual budget presentation.

He explained why it was necessary to do away with the two-dacade old institution and said: "FIPB has successfully implemented e-filing and online processing of FDI applications. We have now reached a stage where FIPB can be phased out. We have, therefore, decided to abolish the FIPB in the year 2017-18. Our roadmap for the same will be announced in the next few months. In the meanwhile, further liberalisation of the FDI policy is under consideration and necessary announcements will be made in due course."

The FIPB was an inter-ministerial body which was responsible for processing of FDI proposals and making recommendations for the government approvals. It acted as a single window clearance for proposals on foreign direct investment in the country.

All you need to know about FIPB

What is FIPB?

The Foreign Investment Promotion Board (FIPB) is an inter-ministerial body, which processes FDI proposals of under Rs 3000 crores and makes recommendations for the government to approve. The FIPB based its decisions on notified guidelines formulated by Department of Industrial Policy and Promotion (DIPP) in the Ministry of Commerce and Industry. The FIPB provided significant inputs for FDI policy-making to the government.

Who are the members of the FIPB?

FIPB comprised of the following Secretaries to the Government of India:

• Secretary to Government, Department of Economic Affairs, Ministry of Finance - Chairperson
• Secretary to Government, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry
• Secretary to Government, Department of Commerce, Ministry of Commerce & Industry
• Secretary to Government, Economic Relations, Ministry of External Affairs
• Secretary to Government, Ministry of Overseas Indian Affairs.

FIPB also included other Secretaries to the Central Government and top officials of financial institutions, banks and professional experts of Industry and Commerce, as and when necessary. The Secretary to the Government of India, Ministry of Small, Medium and Micro Enterprises and the Secretary to the Government of India, Department of Revenue have been co-opted on the Board.

Who is the head of the FIPB?
The Minister of Finance is in-charge of FIPB. While FIPB made recommendations on proposals below Rs 3000 crore, any foreign equity inflow of more than Rs. 3000 crore would be placed for consideration of Cabinet Committee on Economic Affairs (CCEA).