The Union Cabinet on Wednesday approved the abolition of Foreign Investment Promotion Board (FIPB), nearly 25 years after it came into existence.
This is expected to pave the way for the concerned ministries to allow direct approval of foreign investment proposals.
The FIPB was constituted in the mid-nineties under the Prime Minister's Office. FDI inflows had surged to $ 60.1 billion in 2016-17 following the spate of easing of FDI rules by the Narendra Modi Government to accelerate economic growth and give a fillip to job creation.
It may be recalled that Finance Minister Arun Jaitley had in this year's Union Budget announced that FIPB, which clears proposals up to Rs 5,000 crore, would be scrapped.
Briefing reporters after the Cabinet meeting, the Finance Minister Arun Jaitley said this scrapping of FIPB would help in ease of doing business.
He highlighted that over 90 percent of FDI inflows into India in value terms are coming through automatic route.
In the last three years, this has been in the range of 91-95 percent, Jaitley said. The remaining related to only 11 sectors where prior Government approval was required and would continue to be required. The concerned Ministry would directly allow such cases. However, where there are concerns related to security, one would also be required to have Home Ministry approval, he added.