To smoothen overseas fund flows into the country, the government today liberalised the FDI regime and empowered the Foreign Investment Promotion Board (FIPB) to approve projects envisaging foreign equity investment of up to Rs 1,200 crore.
"This is the first major change and liberalisation after 1996 caping of Rs 600 core (FIPB's earlier limit)," Commerce and Industry Anand Sharma told reporters after the Cabinet Committee on Economic Affairs (CCEA) approved the proposal mooted by his ministry.
Henceforth, only those foreign direct investment (FDI) proposals, which envisage overseas equity participation of over Rs 1,200 crore, will go the CCEA, the highest government body on economic matters headed by Prime Minister Manmohan Singh.
Earlier, the FIPB, a body under the Finance Ministry, was empowered to approve projects up to Rs 600 crore.
With the changes in the FDI policy, Sharma said the foreign companies will not be required to obtain no-objection certificates (NOCs) from domestic firms for a second time for raising investment in the ongoing projects.
As per the Press Note 1 of 2005, foreign companies needed NOC from their domestic partners for taking up activities in the same sector through joint venture or technical collaboration with other entities (Press notes, which totals up to 177, define the rules for FDI).
The policy change "is expected to save time and efforts for the FIPB/CCEA and also expedite foreign investment inflow", Home Minister P Chidambaram said briefing reporters about the CCEA meeting.
