No FIPB nod required for M&As in sectors under automatic route

The initiative is aimed at clarifying the grey areas in the foreign direct investment policy

The government has said that FIPB's approval will not be required for merger and acquisitions in sectors where FDI is allowed under automatic route, a move aimed at further improving the ease of doing business in the country.

"FIPB approval would not be required in case of mergers and acquisitions taking place in sectors under automatic route," a new FDI circular of the Department of Industrial Policy and Promotion (DIPP) has said.

The initiative is aimed at clarifying the grey areas in the foreign direct investment (FDI) policy.

Inter-ministerial body Foreign Investment Promotion Board clears investment proposals of up to Rs 3,000 crore.

"This is a step towards ease of doing business. Through this, the DIPP has clarified the existing position," Head of Tax and expert on FDI with corporate law firm Shardul Amarchand & Mangaldas Krishan Malhotra said.

The circular also said that government permission will not be required for issuing ESOPs (Employees Stock Option Plan) in sectors under automatic route.

Currently, foreign investment is permitted either through the automatic route or the government approval route.

The move is aimed at making it easier for doing business in India. India currently ranks 142 out of the 189 countries on Ease of Doing Business list.

During the April-February period of 2014-15, the foreign direct investment grew by 39 per cent year-on-year to USD 28.81 billion.

The government is taking several steps including reduction in number of approvals and clearances to improve ease of doing business in the country and attract domestic and foreign investments.