| The cases referred to the FIPB would reduce by nearly 70% with these changes.
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| The role of the Foreign Investment Promotion Board is set to be reduced further with the government considering doing away with the requirement to obtain clearances from the body in case of all proposals pertaining to wholesale trading.
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| Proposals for conversion of Overseas Corporate Bodies into domestic corporate bodies are also proposed to be put under the automatic route. These measures were expected to become effective by the end of the month after obtaining cabinet approval.
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| A detailed list of proposals for doing away with the need for FIPB approvals is under preparation, a senior government official said. At present, the FDI limit for wholesale trading through the automatic route is limited to 51 per cent.
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| However, 100 per cent FDI is permitted through the FIPB route for the cash and carry wholesale trading.
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| “Proposals come to the FIPB just to obtain the clearance that the investment does not include retail. Instead of coming to the FIPB, companies can simply furnish a certificate,” an official said.
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| Similarly, in the case of conversion of OCBs into domestic corporate bodies, the FIPB requirement is proposed to be done away to reduce duplication since all such cases are referred by the FIPB to the Reserve Bank of India.
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| “Since such cases are decided by the RBI, the reference to the FIPB is not required,” officials said.
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| Officials pointed out that the cases referred to the FIPB would reduce by nearly 70 per cent with these changes.
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| In addition to the above measures the government is also considering doing away with the 26 per cent mandatory divestment clause in sectors like tea plantation and B2B e-commerce. |
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