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The Cabinet Committee on Economic Affairs (CCEA) has raised the threshold for foreign direct investment requiring its approval to Rs 3,000 crore from the present Rs 1,200 crore.
The proposal had been made by the department of industrial policy and promotion (DIPP) under the ministry of commerce and industry.
“This decision is expected to expedite the approval process and result in increased foreign investment inflow,” went an official statement after the meeting on Wednesday.
Presently, investments up to Rs 1,200 crore are cleared by the Foreign Investment Promotion Board of the finance ministry. Those above this limit require approval of the CCEA as well.
“This was done in line with the government’s effort to boost the Make in India campaign and increase the flow of foreign investment,” a senior DIPP official told Business Standard after the CCEA meeting, chaired by Prime Minister Narendra Modi.
The Consolidated FDI Policy Circular, effective from April 17, 2014, will be amended accordingly.
The release also stated the finance minister would consider the recommendations of FIPB on proposals with foreign equity inflow up to Rs 3,000 crore. Also, the government said recommendations of FIPB on proposals with foreign equity inflow of more than Rs 3,000 crore would be placed for consideration of CCEA.
The proposal was originally planned under the previous United Progressive Alliance government when then finance minister P Chidambaram had set up an inter-ministerial group. In the past, several large-scale FDI proposals have got stuck due to the long-drawn approval process.
During April-February, FDI equity inflows increased by 39 per cent to $28.81 billion compared to $20.76 billion in the year-ago period.
