Government implements liberalised FDI norms

The government Friday said it has started implementing more liberal foreign direct investment (FDI) rules under which proposals up to Rs1,200 crore for foreign equity investment would be cleared by the finance minister without seeking approval of the cabinet committee on economic affairs (CCEA).

The department of industry policy and promotion (DIPP) has notified the changes in the FDI rules. Consequently, proposals up to the threshold of Rs1,200 crore would be considered directly by the foreign investment promotion board (FIPB). Earlier, proposals above Rs600 crore were referred to the CCEA.

While the FIPB gives recommendations, the final clearance is given by the finance minister.

The new FDI norm was approved on 11 February by the CCEA, which will now only consider cases of foreign equity above Rs 1,200 crore.

According to a DIPP press note, cases below Rs1,200 crore can be referred to the CCEA in special cases by the FIPB or the finance minister. The special circumstances could relate to issues like national security, an official said.

Besides, foreign investors need not seek fresh approvals from the government or FIPB in sectors which have been transferred to the automatic route or where FDI caps have been removed, and also for additional investment.

With the policy relaxation, the foreign companies will not be required to obtain no-objection certificates (NOCs) from domestic firms for a second-time for raising investment in the ongoing projects.