The government has allowed the Foreign Investment Promotion Board (FIPB), under the commerce ministry, to clear foreign direct investment (FDI) proposals of up to Rs 1,200 crore.
At present, all project proposals that involve investment of above Rs 600 crore are put up before the Cabinet Committee of Economic Affairs (CCEA) for approval.
Announcing the CCEA decision today, Home Minister P Chidambaram said the relaxation would expedite FDI inflow. “The Rs 600-crore cap was fixed in July 1996. Considering the investment requirement and the inflation factors, it has been decided that it should be increased to Rs 1,200 crore,” Chidambaram said.
| OTHER DECISIONS |
| * Cabinet considered the recommendations of the 13th Finance Commission on Thursday. The report of the commission, together with the explanatory memorandum regarding the action taken on the recommendations of the commission, will be tabled in both the houses of Parliament during the Budget session. |
| * CCEA approved the signing of the Air Services Agreement between the central government and the government of Nepal |
| * An MoU signed between the Ministry of New and Renewable Energy and the Government of Scotland for bilateral cooperation in the areas of new and renewable energy was approved. Under the MoU, the two countries will cooperate in technology transfer, training and research |
While the total project cost, including the foreign equity inflow, is currently taken into consideration in deciding whether the proposal is to be put up for CCEA consideration, the new decision will see that only the proposals involving a foreign equity inflow of more than Rs 1,200 crore go to CCEA.
It was also decided that the cases where prior approval of FIPB or CCEA for making the initial foreign investment was taken would not require any fresh approval if those sectors had been brought under the automatic route in the subsequent years. In a separate briefing, Commerce and Industry Minister Anand Sharma said: “This is the first major change in the FDI policy since 1996. It has been done to relax some of the FDI norms. Our FDI inflows had been robust even during the global economic slowdown and this step will augment growth in the flows further.... It is quite likely that the inflows this year would exceed those received during last financial year.”
Total FDI inflows during April-December was $20.92 billion, compared to $21.15 billion during the corresponding period of 2008-09. “This only shows that pace of inflows have been stable,” he said.
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In a separate decision, CCEA revised the rates of concession applicable to two grades of complex fertilisers, to help public sector unit Rashtriya Chemicals and Fertilisers cover the underrecovery of Rs 15.95 crore incurred by it due to increase in gas prices in the July 2005-March 2008 period.
A proposal from the health ministry for Rs 370.97 crore to increase the number of seats in Post-Graduate Institute of Medical Education and Research, Chandigarh, also received the committee’s approval. “While Rs 252.4 crore will be non-recurring expenditure meant to expand the infrastructure over three years, the balance will be of recurring nature,” Chidambaram said. The expansion was necessitated the implementation of the 27 per cent reservation for the other backward class (OBC) community, without altering the number of unreserved seats.