India Considers Easing Approval for FDI-Funded Investments

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Jul. 27 – The Finance Ministry and the Department of Industrial Policy and Promotion is considering allowing foreign funded Indian companies to invest in subsidiaries without needing prior approval.

Currently, local companies with substantial foreign direct investment must obtain approval from the Foreign Investment Promotion Board (FIPB). Most likely the pre-approval process will not be needed for investments that qualify for the automatic route.

“If foreign investment can be made under the automatic route, it would be unfair to require companies to obtain FIPB approval for making such downstream investments,” said Akash Gupt, executive director at PwC.

India needs to encourage more investment in the country to fund infrastructure development. India forecasts net inbound FDI to reach US$30 billion for 2010-11, reports the Economic Advisory Council.