Foreign investment proposals, including those taking the automatic route through the Reserve Bank of India (RBI), will come under intensive scrutiny by the government to ensure compliance with sectoral policies and FDI guidelines.
The ministries of finance and commerce and industry are jointly working on introducing an FDI registration system to monitor all foreign investment cases after these have been approved.
The decision to set up the registration system was necessitated after several instances of non-compliance with sectoral policies were detected in foreign investment cases where approval was sought originally through the automatic route.
Thus, a Chinese company, whose proposal was rejected by the Foreign Investment Promotion Board (the non-automatic route), went ahead and took clearance from the RBI and had been found to be operating in the country, a government source said.
Recently, the FIPB also found that a couple of foreign investors had automatic route approval for, among others, providing news updates, whereas FDI, including non-resident Indians and overseas corporate bodies, is not permitted in the print media.
Around 20-30 per cent of the FDI is currently routed through the RBI, while the remaining takes the FIPB route. This is despite the fact that as per the existing policy, proposals should increasingly go through the automatic (RBI) route. A recent independent survey by an industry chamber has revealed that companies that are eligible to go through the automatic route also apply to the FIPB to get the government
