Article. DIPP rolls out new procedure for FDI approvals. Vignesh Iyer July 02, 2017

Transcription

1 Article DIPP rolls out new procedure for FDI approvals Vignesh Iyer July 02, 2017 Corporate Law Services Group Check at: for more write ups. Copyright: This document is the property of Vinod Kothari & Company and no part of it can be copied, reproduced or distributed in any manner. Disclaimer: This document is intended to initiate academic debate on a pertinent question. It is not intended to be a professional advice and should not be relied upon for real life facts.

2 The Hon ble Finance Minister in his Union Budget Speech 2017 informed that the government is looking forward to liberalise the FDI Policy significantly and is making a move to abolish the Foreign Investment Promotion Board (FIPB). The Finance Minister also added that a detailed roadmap will be soon provided by the government with regard to the implementation of the proposal to abolish FIPB. In line with the same, the Department of Industrial Policy and Promotion (DIPP) on 29 th June, 2017 issued a Standard Operating Procedure (SOP) 1 for processing of FDI proposals. The procedure is explained in this article. Online Filing of Application Competent Authorities for approval of Foreign Investment is as provided in Annexure A. 1 %20FDI%20Proposals.pdf

3 Procedure for processing of applications seeking approval for Foreign Investment Competent Authorities are not to replicate an inter-ministerial body in respective Ministries/Departments to grant approval for foreign investment in order to achieve simpler execution and expeditious disposal of proposals; Proposals for foreign investment in the following sectors will require security clearance and comments from Ministry of Home Affairs (MHA) within 6 weeks of online receipt of the proposal: o Investments in Broadcasting, Telecommunication, Satellites - establishment and operation, Private Security Agencies, Defence, Civil Aviation and Mining & mineral separation of titanium bearing minerals and ores, its value addition and integrated activities. o Investments from Pakistan and Bangladesh;

4 In cases where MHA is not in a position to provide its comments with 6 weeks, it will intimate the concerned administrative Ministry/Department of the expected time frame within which MHA would be able to give its comments. Consultation with DIPP for clarifications required from the point of view of FDI policy in respect of specific issues of proposals will be need based and not routine: o Such clarification as required will be provided by DIPP within 15 days on specific issues of FDI policy as may be referred by the Competent Authority; Consultation with any other Ministry/Department will require full justification and approval of the Secretary concerned: o The Ministry/Department so consulted shall upload their comments on FICP within 4 weeks from the online receipt of the proposal. In case of non-receipt of their comments, it would be presumed that they have no comments to offer; In respect of proposals where the Competent Authority proposes to reject the proposals or in cases where conditions for approval are stipulated in addition to the conditions laid down in the FDI policy or sectoral laws/regulations, concurrence of DIPP shall compulsorily be sought by the Competent Authority within 8 weeks/10 weeks (in cases where comments of Ministry of Home Affairs have been sought from security clearance point of view) from the receipt of the proposal. In case of proposals where the Competent Authority proposes to reject or in cases where conditions for approval are stipulated in addition to the conditions laid down in the FDI policy or sectoral laws/regulations, concurrence of DIPP shall compulsorily be sought by the Competent Authority within 8 weeks/10 weeks (in cases where comments of MHA have been sought from security clearance point of view) from the receipt of the proposal. Time Limits S.No. Action Points i. Dissemination of Investment Proposal by DIPP to Concerned Ministry/Department ii. Time for submission of signed physical copy of the proposal by applicant to the Competent Authority, if needed iii. Initial scrutiny of the proposal and documents attached therewith, and seeking relevant additional information/documents from the applicant Time Period 2 days 5 days One Week Cumulative Time Period One Week Two Weeks

5 S.No. Action Points iv. Time limit for submission of clarification by DIPP on specific issues of FDI policy v. Time limit for Submission of Comments by Consulted Ministry/ Department/ RBI/ Any Other Stakeholder vi. Time limit for submission of Comments by Ministry of Home Affairs on proposals requiring security clearance vii. Time limit for approval on proposals by Competent Authority for grant of approval Proposals not requiring security clearance Proposal Requiring security clearance Time Period Two Weeks Four Weeks Six Weeks Two Weeks Cumulative Time Period Four Weeks Six Weeks Eight Weeks Eight Weeks Ten Weeks Note: i. Additional time of 2 weeks will be given to DIPP for consideration of those proposals which are proposed for rejection or where additional conditions which are not provided in the FDI policy are proposed to be imposed by the Competent Authority. ii. Time limits allocated exclude the time taken by applicants in removing deficiencies in the proposals/supplying additional information as may be required by the Competent Authority. Monitoring & Review A regular monthly review will be held by the Competent Authorities on the foreign investment proposals pending with them; A Joint quarterly review meeting convened by DIPP, will be held under the cochairmanship of Secretary, DIPP and Secretary, DEA on pendency of proposals with Government: o The Secretary of the concerned Administrative Ministry/Department may also attend the meeting. Database DIPP and each Competent Authority are mandated to maintain a database on the proposals received along with the following details: Date of receipt;

6 Details of investor and investee company details; Volume of foreign investment involved; and Date of grant of approval/rejection letter Conclusion The SOP framed and issued by the government through DIPP to process the FDI proposals seems to help improve the efficiency of the process. The timeline as provided in the SOP clearly indicates the intent of the government to curb out unnecessary delays in the processing of FDI proposals. Additionally, the involvement of Competent Authorities, MEA, MHA and DoR improves the depth of scrutinizing the process along with avoiding the overall delay in the process through the enforced time limits. The success of the new SOP structured by the DIPP may well be weighed once the new proposals are put through them for approval.

7 Annexure A

8