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Rediff News  All News  » Business » FDI plans in trade may skip FIPB nod

FDI plans in trade may skip FIPB nod

April 04, 2005 09:48 IST
Companies with foreign direct investment proposals in the automatic route will soon no longer be required to approach the Foreign Investment Promotion Board for approvals, if their proposals have a trading aspect.

At present, even if an FDI proposal is permitted under the automatic route, companies have to approach the FIPB to get a clearance stating "subject to standard trading conditions", if the proposal involves any kind of trading such as sales, etc.

"We are planning to do away with this requirement by including a clause in the FC-GPR form filled by investors under the automatic route. The clause would state the investor's undertaking to abide by the standard trading conditions," a senior government official told Business Standard.

Once the requirement is done away with, only proposals which invoke the Press Note 1

clause, dealing with permission for a company with an existing venture for setting up a new venture, will come before the FIPB, officials said.

The FC-GPR form requires investors seeking FDI permission under the automatic route to provide details about the nature of the company's business, the address, the number of shares and the capital invested.

Investors in the form also give an undertaking that the said investment is within the FDI limit allowed in the sector and that the product is not an item produced by small-scale industry.

The measure is being considered a part of an ongoing exercise to simplify investment procedures.

The government is hoping to garner about $8 billion through foreign direct investment inflows during the current financial year.

Monica Gupta in New Delhi