The Foreign Investment Promotion Board (FIPB) has been decided to be abolished, Finance Minister Arun Jaitley declared in his budget presentation on Tuesday.
While, the FIPB had the final say in approving Foreign Direct Investment (FDI) proposals in the country for long, its power has been systematically reduced under the current government. Most notably, back in June, 2016 the government had announced relaxed FDI norms in single brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products.
It had allowed up to 100% FDI in defence through the approval route, 100 per cent FDI in food product e-commerce, 100 per cent FDI in greenfield pharma via the automatic route, 100% in browfield pharma — of which 74% will be through automatic route — 100 per cent FDI in scheduled airlines, and up to 49 per cent FDI in airlines through automatic route.
In the last two years, the government has brought major FDI policy reforms in a number of sectors, including defence, construction development, insurance, pension sector, broadcasting sector, tea, coffee, rubber, cardamom, palm oil tree and olive oil tree plantations, single brand retail trading, manufacturing sector, limited liability partnerships, civil aviation, credit information companies, satellites – establishment/operation and asset reconstruction companies.
Incoming FDI grew 27 per cent in the first seven months of the fiscal to $27.82 billion, from $21.87 billion a year ago. Manufacturing accounted for 41.5 per cent of the total equity inflows into the country during April-October, according to the Department of Industrial Policy and Promotion’s (DIPP) year-end review.
This happened at a time when the government made a fervent pitch abroad for ‘Make in India’ to make India a manufacturing hub of the world and generate large scale employment. Services, telecom, trading, computer hardware and software and automobiles were among the major sectors that attracted FDI during this period.