Easing the FDI Approval Process

The Government has introduced a recent change to the approval process for FDI that may ease the process, at least for some large transactions. The threshold for obtaining the approval of the Cabinet Committee on Economic Affairs has been increased from Rs. 600 crore (Rs. 6 billion) to Rs. 1200 crore (Rs. 12 billion). The press release sums up the change:

Presently, the recommendations of the Foreign Investment Promotion Board (FIPB) on proposals with total project cost up to Rs.600 crore are approved by the Finance Minister and proposals involving total project cost more than Rs.600 crore are put up to the Cabinet Committee on Economic Affairs. Further, presently the total project cost, including the foreign equity inflow, is taken into consideration in deciding whether the proposal is to be put up for consideration of CCEA. With today’s approval, only proposals involving total foreign equity inflow of more than Rs.1200 crore would be placed for consideration of CCEA. The recommendations of FIPB on proposals with total foreign equity inflow of and below Rs.1200 crore will be considered by the Finance Minister for approval.

This will certainly minimize any delays in investment proposals that are between Rs. 600 crores and Rs. 1200 crores.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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