Cabinet approves abolition of 25-year-old Foreign Investment Promotion Board

New Delhi: The Union Cabinet on Wednesday approved the abolition of the 25-year-old Foreign Investment Promotion Board (FIPB), which currently vets FDI proposals requiring the government approval.

Finance Minister Arun Jaitley in his Budget speech on February 1 announced scrapping of the inter-ministerial body, which comes under the finance ministry's Department of Economic Affairs.

The FIPB was initially constituted under the Prime Minister's Office in the wake of economic liberalisation in the early 1990s.

Currently, FDI in 11 sectors including defence and retail trading requires government approval.

FIPB will be replaced by a new mechanism under which the proposals will be approved by the ministries concerned as per the standard operating procedure approved by the Cabinet, finance minister Arun Jaitley said.

Jaitley further said that proposals in sensitive sectors will require the home ministry's approval.

On the proposals pending with FIPB, he said they will go back to the ministries concerned.

There could also be a provision for quarterly review of pending proposals by the economic affairs secretary and annual review by the finance minister.

The FDI proposals above Rs 5,000 crore would continue to be cleared by the Cabinet Committee on Economic Affairs.

Inflow of foreign direct investment into India increased by 9 percent to USD 43.48 billion in 2016-17.

With PTI Inputs