Raising of monetary approval limits for FIPB ignores other issues

No timeframe for project clearance was set, nor has there been significant changes in FIPB's mode of working.

The foreign investment promotion board (FIPB) has cleared 164 proposals of foreign direct investment (FDI), representing 60 per cent of the 271 applications it received till October this year. This was higher than the 54 per cent of the total 375 proposals cleared by FIPB in 2014.

The body has also seen a drop in the number of proposals coming its way. Official statistics suggest that while it considered 375 proposals in 2014, the figure was 390 in 2013. With more segments of the economy being opened to industry for direct investment through the automatic route, this number is set to come down. Till October this year, it received 271 proposals.

The government had on Tuesday raised the FIPB monetary limit to approve foreign investment up to Rs 5,000 crore from the existing Rs 3,000 crore, as part of significant changes to its FDI policy. Proposals worth above Rs 5,000 crore would go to the Cabinet committee on economic affairs (CCEA).

However, other than raising its monetary approval limit, the recent changes have left FIPB untouched. It has not sought to set a timeframe for project clearance nor have there been significant changes in its mode of working.

Information available on the FIPB website suggests it had cleared investment proposals worth Rs 33,982 crore during January-October of the current year. There was a meeting scheduled for November 9, but was deferred.

The total number of proposals approved was 203 in 2014.  This amounted to a total of Rs 44,817 crore worth of FDI inflow. The number of proposals finally disposed of (including approved, rejected and sent to CCEA) in 2014 was 266 or 71 per cent of the total proposals received.

Also, 96 proposals were deferred in 2014, raising issues of efficiency and speed. However, the rate of case disposal rose from 65 per cent in 2013. Investments often involve a significant number of ministries and the final approval by each, after considering individual objections makes the setting of a timeframe for project clearance difficult.
 

Information available on the FIPB website suggests it had cleared investment proposals worth Rs. 33,982 Crore (339.82 Billion) since January of the current year. This involves a total of 164 proposals.

As against this, total number of proposals approved were 203 in 2014.

The body has also seen a drop in the number of proposals coming its way. Official statistics suggest that while it considered 375 proposals in 2014, the figure was 390 in 2013.

The number of  cases finally disposed of was 266, or 71 per cent of all cases, the rest being deferred or passed on to the CCEA. While this is an increase over the 65 per cent of cases disposed of in 2013, issues of efficiency and speed remain.

Being a recommending body, FIPB approvals can only be valid after the finance minister considers and approves them.

The last major changes undertaken at FIPB had been in February of the current year whereby the website was updated with more features and enhanced capabilities. Also, the provision of filing 15-18 physical copies of investment proposals was dropped in favour of a single digital copy.