Will FPI single-window clearance remain a distant dream?

Differences between Sebi and CBDT have delayed the proposal, says report

The single-window clearance system for FPIs proposed in the budget for this year has hit a roadblock with reports suggesting that differences between Sebi and CBDT have delayed the proposal. Take a look at what the issue is all about.

What is single-window clearance?

Foreign portfolio investors (FPI) who wish to invest in Indian financial markets have to register with multiple regulatory bodies including the Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI) and Central Board of Direct Taxes (CBDT). The documentation process is tedious as it involves obtaining PAN number, Foreign Account Tax Compliance Act (Fatca) certificate among other things. The tedious registration process dissuades many potential investors from coming to India. In a bid to ease the process, Sebi has proposed to offer a single-window clearance to FPIs. The move will do away with the need for obtaining separate approvals from various regulatory bodies. It would also reduce the time taken for obtaining approval. Currently, it takes up to two months to obtain license from the day of filing the application. Issuance and verification of PAN card is under tax department purview which itself takes more than 15 days time to get clear. However, FPIs need to provide the copy of PAN card within 60 days of account-opening or before remitting funds out of India, whichever is earlier to their intermediaries.

What is the status of the proposal?

The single-window clearance facility was to be implemented before the end of fiscal 2017-18. To meet the objective, Sebi and other agencies including RBI, CBDT (a governing body of Income-Tax department) had started work on the proposal.

Move hits a roadblock?

According to reports in the Mint newspaper, differences between Sebi and CBDT have delayed the proposal. While Sebi is in favour of reducing documentation, CBDT wants to stick to its own set of documents, including an incorporation document and Foreign Account Tax Compliance Act (Fatca) documents, the report says.