Foreign Investment Promotion Board - Background, Overview, Features & Abolition

FIPB full form is Foreign Investment Promotion Board. It was a government agency in India, responsible for processing foreign direct investment (FDI) proposals and making recommendations for government approval. It was established in 1991 as part of the government's economic liberalization program. It was situated within the Department of Economic Affairs under the Ministry of Finance, functions as an inter-ministerial body. Its role involves handling and evaluating Foreign Direct Investment (FDI) proposals, subsequently offering recommendations for government approval. The FIPB decisions are guided by the existing FDI Policy, Press Notes, and other relevant guidelines established by the Department for Promotion of Industry and Internal Trade (DPIIT) within the Ministry of Commerce and Industry. Through its recommendation process, the FIPB plays a crucial role in contributing substantial insights for the formulation of FDI policies.

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In this article on the Foreign Investment Promotion Board, we shall discuss its background, overview, objectives, functions, and significance in detail.

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About Foreign Investment Promotion Board 

• The Department of Economic Affairs of the Ministry of Finance is home to the Foreign Investment Promotion Board (FIPB), an inter-ministerial organization tasked with processing FDI bids and offering suggestions for government approval.
• The present FDI Policy, Press Notes, and other important published guidelines, which serve as the basis for FIPB judgments, were developed by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Ministry of Commerce and Industry.
• The FIPB offers recommendations which have a significant impact on FDI policy.
• When the FIPB was transferred to DIPP in 1996, the Board was recreated.
• For project applications with a total investment of no more than Rs. 600 crores each, the Industry Minister will consider and accept FIPB recommendations.
• Before a decision is reached, the Cabinet Committee on Foreign Investment will review the bids for the projects, each of which will require an investment of more than Rs. 600 crores (CCFI).
• The CCFI would also take into account any ideas made to it or those that the Industry Minister had rejected.

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Composition of Foreign Investment Promotion Board 

• Secretary to the Government of India, DEA, Ministry of Finance – Chairman
• Secretary to the Government of India, Department for Promotion of Industry and Internal Trade (DPIIT).
• Secretary to the Government of India, Department of Commerce (DoC).
• Secretary to the Government of India (Economic Relations), Ministry of External Affairs (MEA).
• Secretary to the Government of India, Ministry of Overseas Indian Affairs (MOIA)
• Secretary, Department of Revenue (DoR), Ministry of Finance (co-opted permanently).
• Secretary, Ministry of Small and Medium & Micro Enterprises (co-opted permanently).

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Functions of the FIPB

• To conduct more thorough marketing campaigns to increase awareness and make FDI appear alluring to investors from various countries.
• By taking part in activities that encourage investment in the nation, the Foreign Investment Promotion Board hopes to increase the quantity of FDI that enters India.
• When assessing investment applications in India, the FIPB will serve as an efficient, friendly, and open single window board for investors.
• Direct investments may be made in India by multinational corporations, non-resident Indians, and other international investors.
• It facilitates communication of information between governmental, nonprofit, corporate, and agency entities.
• It is crucial to make sure that FDI raising proceeds more quickly and that approvals are not in any way delayed.
• To keep the country’s system for luring foreign direct investment transparent and effective.
• Research must be done on each of these industries independently to determine the quantity and type of FDI needed by each.
• To look into how money received through foreign direct investment is used and put to use.
• The Foreign Investment Review Board and the Foreign Investment Promotion Council should communicate better, according to its second goal (FIPC). In order to spread the word and draw in FDI investors, it also engages in more aggressive marketing.

Foreign Investment Facilitation Portal – FIFP

• To facilitate foreign direct investment, the Indian government has created a new single-point website gateway called the Foreign Investment Facilitation Portal (FIFP).
• It is an inter-ministerial group with the authority to review and recommend changes to:
  • the FEMA regulations, 
  • the 11 sectors that have been submitted to the government, and 
  • the Foreign Direct Investment (FDI) policy.
• For companies that don’t qualify for automatic approval, FIFP authorization is required.
• Any investments worth greater than Rs. 5000 crore would be evaluated and approved by the Cabinet Committee on Foreign Investment (CCFI).
• Any investments under 5000 crore rupees will be evaluated and approved by the Ministry of Commerce.

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Conclusion

The creation of the Foreign Investment Facilitation Portal in place of the Foreign Investment Promotion Board has greatly helped to enhance the FDI Inflow in India in the last few years. However, certain bottlenecks that still exist in the FDI Regime of India need to be addressed by the Government of India on an urgent basis by following a multi-stakeholder approach to further augment the inflow of FDI in India.

We hope that all your doubts regarding the Foreign Investment Promotion Board will be cleared after going through this article. You can download the Testbook App now for Online classes for UPSC.