Reasons To Abolish Foreign Investment Promotion Board (FIPB)

Published on Monday, January 14, 2019

INTRODUCTION:

  • The Foreign Investment Promotion Board (FIPB) is nothing but a national agency of Government of India, with the duty to consider & recommend foreign direct investment (FDI) that doesn’t come back beneath the automated route. 
  • The Indian government in the budget 2017-18 announced its purpose of ending FIPB in the financial year 2018. 

BACKGROUND:

  • The FIPB was primarily constituted under the Prime Minister's Office (PMO) in the wake of the economic liberalisation effort of the early 1990s. 
  • In 1996, the board was re-formed with the transfer of the FIPB to Department of Industrial Policy & Promotion (DIPP). 
  • Later, FIPB was transferred to Dept. of Economic Affairs & Ministry of Finance. Finance Minister is the head of the board. 
  • The FDI flows into India in two ways, the automatic route & through the approval by the government. 
  • Foreign Investment Promotion Board deals with a single window authorization mechanism for FDI applications in sectors under the approval route. 
  • The board has handled investment applications worth up to Rs. 5,000 Crore. 

Must Read:

Difference Between FDI and FII

REASONS CITED:

  • Presently, about 90% of the Foreign Direct Investment inflows are channelled through the Automatic Route which does not require erstwhile approval from the FIPB & is subject to sectoral rules. 
  • For the rest of the FDI inflows (about 8% of the total FDI), every division concerned has a structure or a regulator for it. 
  • FIPB has successfully employed e-filling & online processing of foreign direct investment requests. 
  • Therefore, the government feels that it has now reached a stage where FIPB can be phased out.

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