A nod from the Foreign Investment Promotion Board is not enough for foreign direct investment in duty-free shops at airports.

A separate clearance will now be required from the finance ministry's revenue department, according to an official
clarification issued earlier this week.

The clarification, issued on Friday, says: "FIPB approval is only for the purpose of permitting foreign investment and any such approval does not automatically confer a right on the applicant to open a duty free shop at any port."

The clarification assumes importance in the backdrop of increasing cases where FDI proposals have been opposed by the revenue department due to concerns over revenue losses.

The FIPB considers FDI proposals in totality, including technical collaboration, industrial license and foreign investment for composite approval or, otherwise keeping in view sectoral requirements and sectoral policies, it said.

The recommendation of the FIPB in respect of these proposals was only for foreign inancial and technical collaboration, it said.

"Foreign investors will, however, need to take other prescribed clearances separately," it said, adding that observance of any conditions stipulated under the Customs Act, 1961, was mandatory.

Customs officers have been instructed to ensure that the conditions, restrictions and guidelines issued in this regard and statutory requirements are followed before grant of licences for setting up a duty free shop even in cases where the FIPB has approved the proposal.