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FDI regulations eased in India
27 June 2017

Written by Nitin Potdar of J.Sagar Associates | advocates and solicitors, Mumbai

Foreign Direct Investment (FDI) in India hit an all-time high of $60.1 billion in 2016-17, as the Government of India has further eased rules to attract global corporations to set up shop in new sectors such as defence and railways.

Since 90% of the FDI is now under the automatic route (FDI allowed without prior approval by Government or Reserve Bank of India), the Government of India in an effort to further simplify foreign investment has abolished the Foreign Investment Promotion Board (FIPB), an inter-ministerial body responsible for processing proposals requiring government approval for FDI into India. The powers of the FIPB will now vest with the sector-specific administrative ministries / departments. For instance, applications for foreign investment in the telecom sector will now be processed by the Department of Telecom, Ministry of Communications.  

Applications for FDI will continue to be filed through the existing FIPB portal, which will now be overseen by the Department of Industrial Policy and Promotion (DIPP). The DIPP has laid down Standard Operating Procedure (SOP) for processing applications for foreign investment in consultation with the specific ministries/ departments. The SOP has fixed time limits for every stage of clearance. FDI proposals which do not require security approval would be cleared in eight weeks, while those needing clearance would be approved in 10 weeks. While there could be some temporary delays in processing foreign investment applications until specific ministries/departments get on board, scrapping of FIPB is a great step towards simplifying the process for foreign investment and further improving the ‘ease of doing business’ in India.

For more information about the International team and how they can help you please contact Mark Blunden on 0118 952 7247 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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