The Reserve Bank of India is set to take on the onus of framing Standard Operating Procedure (SOP) for Foreign Direct Investment (FDI) approvals in India. The apex court will be laying out norms for the approval of FDI proposals by various ministries.
The move comes after the government announced its decision to abolish FIPB (Foreign Investment Promotion Board), the agency which was in charge of clearance for proposals on foreign direct investments in India.
Arun Jaitley, the Finance minister of India, proposed the abolition of the FIPB during the budget in February, 2017. Tt has since been anticipated that the apex bank would take up the responsibility of bringing in more reforms in the FDI policy.
In a recent inter-ministerial meeting, the possibility of setting up norms for FDI approvals in sensitive sectors like defence and telecom was discussed. These sectors are currently dependent on government approval for FDI. Only companies having valid licences can seek foreign investments in sensitive sectors.
Once the FIPB is abolished, the responsibility of approving FDI proposals would be on individual ministries and concerned regulatory authorities. It would become imperative to set down uniform norms of approval across different ministries.
According to sources, the RBI can be requested to prepare SOPs for every ministry. The Home Ministry might be required to vet FDI proposals from our neighbours, Pakistan and Bangladesh.
These and such similar issues are under discussion of the Committee for FDI approvals. The Committee formed by the government includes representatives from the RBI, Finance Ministry, the Department of Industrial Policy and Promotion, and the Ministry of Home Affairs. They are expected to submit a report within two months with proposed guidelines for FDI approval procedures in sensitive sectors.