FIPB allowed to clear FDI proposals of up to Rs 1,200 crore

Feb 12, 2010

The government has allowed the Foreign Investment
Promotion Board (FIPB), under the commerce ministry,
to clear foreign direct investment (FDI) proposals of
up to Rs 1,200 crore. At present, all project proposals
 that involve investment of above Rs 600 crore are put up
before the Cabinet Committee of Economic Affairs (CCEA) for
 approval.

Announcing the CCEA decision today, Home Minister
 P Chidambaram said the relaxation would expedite
FDI inflow. “The Rs 600-crore cap was fixed in July 1996.

 Considering the investment requirement and the inflation factors,
 it has been decided that it should be increased to Rs 1,200 crore,”
 Chidambaram said.

While the total project cost, including the foreign equity inflow,
is currently taken into consideration in deciding whether the proposal
 is to be put up forCCEA consideration, the new decision will see that
only the proposals involving a foreign equity inflow of more
than Rs 1,200 crore go toCCEA.

It was also decided that the cases where prior approval of
 FIPB or CCEA for making the initial foreign investment was
taken would not require any fresh approval if those sectors
had been brought under the automatic route in the subsequent
years.

In a separate  briefing, Commerce and Industry Minister
Anand Sharma said: “This is the first major change in the
FDI policy since 1996. It has been done to relax some of
the FDI norms. Our FDI inflows had been robust even during
the global economic slowdown and this step will augment
 growth in the flows further…. It is quite likely that the
inflows this year would exceed those received during last
financial year.” Total FDI inflows during April-December
was $20.92 billion, compared to $21.15 billion during the
corresponding period of 200809. “This only shows that pace of
inflows have been stable,” he said.