Foreign Investment Promotion Board [FIPB]

The Foreign Investment Promotion Board [FIPB] was a government of India institution that granted solitary clearance for Foreign Direct Investments (FDI) applications that were not accepted through the designated route. The FIPB was supervised by the Finance Minister and part of the Ministry of Finance. Former Union Finance Minister Mr Arun Jaitley declared in his 2017-18 budget speech in Parliament. The Union Government chose to phase out the Foreign Investment Promotion Board [FIPB], and it was abolished in May 2017.

Scope of Foreign Investment Promotion Board [FIPB]

The Foreign Investment Promotion Board [FIPB] was the most crucial body for FDI approvals until it was abolished because it could review applications valued at less than Rs.3000 crore. The Cabinet Committee on Economic Affairs examined the FDI application if it exceeded this specified value. After the government's economic liberalisation policies, the organisation was founded in the 1990s. The Foreign Investment Promotion Board [FIPB] was conducted on April 17th, 2017.

Members of the Foreign Investment Promotion Board [FIPB]

The members and hierarchy of the Foreign Investment Promotion Board [FIPB] are as follows:

• The Secretary of the Ministry of Finance's Department of Economic Affairs is the chairperson of the Foreign Investment Promotion Board [FIPB].
• The Secretaries from DIPP, Department of Commerce, Economic Relations, and Ministry of External Affairs

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Functions of Foreign Investment Promotion Board [FIPB]

The functions of the Foreign Investment Promotion Board [FIPB] include but may not be limited to:

• To approve foreign investment proposals as rapidly as possible.
• Reviewing FDI policies and communicating with other authorities, such as the Administrative Ministries, provides transparent norms that attract Foreign Direct Investments [FDI] into diverse sectors.
• Examining the implementation of the numerous ideas that it has authorised.
• To engage in efforts that encourage foreign direct investment into the country.
• Increase the flow of FDI into the country via communicating with the government, non-government organisations, and industry.
• To determine the numerous industries that require FDI.

Reasons to dissolve the Foreign Investment Promotion Board [FIPB]

There is a good reason to believe that the Foreign Investment Promotion Board [FIPB] was dissolved as it prevented India's liberalisation policy of 1991 to flourish incomplete form. Here are some arguments that made the Indian government dissolve the Foreign Investment Promotion Board [FIPB]:

• The retention of the clearance route system shows that, despite our relatively excellent experience with capital inflow deregulation, we nonetheless rely on central planning to run the economy.
• The approval process establishes arbitrary entrance barriers between two competitors who meet the policy's requirements.
• It exposes the system to regulatory discretion and adds to its volatility and red-tapism.
• The practice of obtaining permits and conditional exemptions breeds ad hocism and cronyism.
• This has negative consequences for implementing a fair and rule-of-law-based capital controls regulatory framework.

After eliminating the solo FIPB window, approval responsibilities for individual sectors are now delegated to various ministries and government entities, with an interdisciplinary coordination system established. Only 11 industries require advance government permission, which the relevant department directly handles.

The FIPB's relevance has been lessened as India has opened up numerous areas to foreign companies looking to launch a business in India. Individual government departments will have the ability to clear FDI plans when the Board is abolished, collaborating with the DIPP, which will also publish standard operating procedures for processing applications.

Although the Foreign Investment Promotion Board, has been disbanded, it remains an essential economic and political endeavour for India.

FAQs on Foreign Investment Promotion Board [FIPB]

Q.1. When was the Foreign Investment Promotion Board [FIPB] established?

The Foreign Investment Promotion Board [FIPB], was established in August 1991 post-Indian government's liberalisation policies.

Q.2. When was the Foreign Investment Promotion Board [FIPB] abolished?

It was abolished in May 2017. The Foreign Investment Promotion Board [FIPB] held its last meeting on April 17th 2017.

Q.3. Who was the chairperson of the Foreign Investment Promotion Board [FIPB]?

The Secretary of the Ministry of Finance's Department of Economic Affairs is the Foreign Investment Promotion Board [FIPB].

Q.4. What is the maximum value of an FDI that the Foreign Investment Promotion Board [FIPB] could approve?

The Foreign Investment Promotion Board [FIPB] could review applications and approve FDIs valued at less than Rs.3000 crore.