Home ministry told to avoid needless objections to FDI

The Times of India
May 03, 2018

The government has asked the home ministry to stick to its remit while clearing foreign investment proposals after it came to light that several unsubstantiated concerns had been expressed by low-ranking officials, which delayed decisions.

With the abolition of the Foreign Investment Promotion Board (FIPB), the inter ministerial agency for foreign direct investment (FDI), proposals were expected to be cleared quickly. But in sectors such as telecom and I&B, proposals were taking longer to clear, which was initially blamed on the administrative ministries. But later, it turned out that comments from the home ministry were resulting in proposals getting held up.

Under the current regime, a security clearance is needed from the home ministry. In several cases, it was found that the home ministry’s comments were not backed by sufficient proof, said a source.

For instance, in one case, apprehensions were expressed about a director of a company, suggesting he was also associated with an entity allegedly involved in round-tripping funds. When the matter was referred to the revenue department and documents were sought, it turned out the evidence was unavailable. Similarly, questions were raised about the valuation of a company, which resulted in a delay in clearing the proposal.

But with the matter now being monitored directly by the Prime Minister’s Office, sources said, a message has gone out clearly that unnecessary concerns without any basis should not hold up decisions.

“While security is paramount, junior officers will not be allowed to derail investments by raising fears based on information on the internet,” said a senior government official. An officer said a protocol has been devised to avoid delays in clearance. While over 95% of FDI proposals do not need clearance from the government or the Reserve Bank of India, approvals are required in sectors such as telecom, civil aviation and information and & broadcasting.

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