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The Department of Industrial Policy & Promotion (DIPP) is working on the specifics of dealing with foreign direct investment (FDI) proposals rejected by the line ministries and is finalising the conditions under which it could overturn such decisions.
“Once some preliminary decisions are taken by the DIPP on how to go about rejected cases or cases with additional conditions imposed by line ministries, it will consult other Ministries and Departments on the matter and hold a review meeting,” a government official told BusinessLine .
Following the dismantling of the Foreign Investment Promotion Board, an inter-ministerial body which assessed FDI proposals not on the automatic approval route, the responsibility for approving such proposals is on the line ministries who are the competent authorities.
However, the Centre’s decision to throw a life-line to entities whose FDI proposals are rejected by the competent authority by vesting the final decision in such cases with the DIPP has complicated things a little.
The Standard Operating Procedure (SOP) for processing FDI proposals circulated by the DIPP earlier this month also stipulates that FDI cases where line ministries have imposed additional conditions other than what are laid down in the FDI policy, the DIPP could intervene.
“These are sensitive matters. Once a line ministry has rejected a FDI proposal or imposed additional conditions, the DIPP has to have strong grounds for overruling such decisions. That is why the procedures have to be clearly laid down,” the official said.
Once the matter is settled within the DIPP, it will call an inter-ministerial meeting focussing on the new standard operating procedures that have been issued and hold a review. Senior officials from key ministries and departments including the Department of Economic Affairs, Ministry of Home Affairs, DIPP, Mines, Defence, Information & Broadcasting, Telecom, Space and Civil Aviation are likely to participate.
Under the new dispensation following the abolition of FIPB, the DIPP sends the FDI proposals filed online to the administrative departments and ministries (competent authorities) which go through the proposals based on the SOP issued to them for assessment and approval.
Competent authorities are required to hold a regular monthly review on the foreign investment proposals pending with them.
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