It becomes easy to invest in India with the abolishment of FIPB

Finance minister Arun Jaitley on Wednesday announced the abrogation of Foreign Investment Promotion Board (FIPB), a body that clears proposals envisaging foreign investment up to Rs5,000 crore.

FDI and FIPB

The FIPB (Foreign Investment Promotion Board) is the designated institution which considers the FDI proposals that require government approval. It likewise concedes composite approvals involving foreign investment/technology. FIPB is situated in the Department of Economic Affairs, Ministry of Finance and the Finance Minister is in charge of the FIPB. According to the June 2016 FDI policy revision, the FIPB can give suggestions of FDI proposals below Rs 5000 crore to the Minister of Finance for consideration

India is having a well-designed Foreign Direct Investment control administration. FDI is regulated through various norms. A minimum lock in period, minimum capital for investment, sectoral limits and in particular control of passage into approval/automatic route are the vital regulations.

For the situation of entry regulations, FDI section is made under two classifications – automatic route and approval route. Approval from the government is compulsory for some sort of investment. For this, approval institutions are made. The Foreign Investment Promotion Board is the most imperative approval body as it can consider FDI below Rs 5000 crore. Over this sum, the Cabinet Committee on Economic Affairs is the approval authority.

What FIPB does

It is entirely evident that the element affirms foreign investment proposals; it additionally audits FDI strategies, investigates the implementation of various proposals passed. This, as well as take up exercises that encourage FDI into the nation, for example, establishing contracts with international organizations and furthermore inviting them to invest in India.

FIPB was initially constituted under the Prime Minister's Office (PMO) in the wake of the economic progression drive of the mid 1990s. The board was reconstituted in 1996 with exchange of the FIPB to the Department of Industrial Policy and Promotion (DIPP).

It was again transferred to the Department of Economic Affairs, under the ministry of finance, in 2003.