Proposal to give FM power to approve foreign investments of up to Rs 1,200 crore

Nov 10, 2009


The finance minister could approve foreign investments of up
to Rs 1,200 crore (Rs 12 billion), without going to the Cabinet,
if a proposal of the Department of Industrial Policy and
 Promotion to fast-track clearance of foreign direct investment is accepted.

At present, a project with investment of more than
 Rs 600 crore (6 billion) in sectors routed through
the Foreign Investment Promotion Board has to
 be referred to the Cabinet Committee on Economic Affairs.

“With the depreciation of the monetary value, it is
 considered appropriate to review the limit, which
 may be revised to Rs 1,200 crore (12 billion),”
according to a Cabinet note circulated by DIPP.
The Rs 600-crore limit was set in 1996.

DIPP has argued that the proposal would “enable
 FIPB to function more efficiently and reduce
 regulatory burden on foreign companies, leading
to enhanced level of foreign investments”.

India received $15.3-billion FDI in the first half
of this financial year. It is lower than
the $17.2 billion received in the first half
 of 2008-09, but the inflow is seen as healthy,
 given the global liquidity crunch.

There is also a proposal that the threshold for
CCEA approval be fixed for only the ‘foreign investment’
part of the project and not the total investment involved
 and its total cost.

The committee of secretaries is meeting on November 17
to review the country’s FDI policy, and the DIPP proposal
 to enhance the finance minister’s power is likely to be
discussed there.

Under the present dispensation, the proposals relating to
the sectors not under the automatic route go to the FIPB,
 which gives its recommendation to the finance minister