Faster FDI approves on the horizon

Copyright © HT Digital Streams Limit all rights reserved. The industry faster FDI approvals on the horizon, as India empowered trade assignments. The initiative will also break the FDI inflow’s slide over the past three years and move the momentum to an upward curve. (Reuters) Summary Depending on the nature of the investment, the proposal is sent to other ministries such as finance or home affairs for additional clearance. Depending on the complexity of the proposal and the need for inter -ministerial coordination, the process may take several months. India wants to strategically utilize its trading assignments to position itself as a more attractive destination for foreign investment, according to two people familiar with the matter. Indian missions abroad will be given the authority to grant approvals to direct foreign investment (FDI) from different countries in a move that can cut bureaucratic barriers, the persons cited above on condition of anonymity. The thinking of the center discussed in a recent high-level meeting involving the most important government of the government in the background of a global re-alignment of supply chains and a great interest from international enterprises seeking manufacturing alternatives to China, which has unprecedented rates of up to 245% for exports to the US. The initiative will also break the FDI inflow’s slide over the past three years and move the momentum to an upward curve. “Proposals will be submitted to the trade assignments, and it is their responsibility to coordinate at home with the relevant stakeholders and facilitate approval,” the first person cited above. “This will enable investors to plan their Indian strategy more efficiently without getting stuck in an endless loop of approval.” Read also | Insurance Laws Bill is set on the Monsoon session, proposes 100% FDI, compound licenses and livestock reforms. “The plan is being considered and is expected to be approved soon,” the second person said. “The approvals in the principle will enable companies to start planning, such as choosing websites and contacting partners, while the final approvals will follow in a more streamlined process. The approvals will be granted within a specified timeframe.” The proposed shift, discussed at a recent meeting met by the Ministry of Trade with the Department of Promotion of Industrial and Internal Trade or DPIIT, Foreign Ministry (MEA) and the Ministry of Finance, is a significant departure from the traditional bureaucratic process, in which such proposals take months to remove at the ministry level. The sectors identified by the government for the initiative include defense, pension, other financial services, asset-rebuilding companies, broadcasting, pharmaceuticals, retail trade, construction and development, civil aviation, power exchanges, e-commerce activities, coal mining, contract manufacturing, digital media, petroleum and natural gas. Inquiries by e -mail to the finance, trade and foreign ministries remained unanswered until press time. Biswajit Dhar, economist and prominent professor at the Social Development Council, pointed out that it is only one part of the process, and that state governments also play an important role. “Other approvals are needed at the state level, so the process over both levels of government must be streamlined,” Dhar said. “The goal should be to have both levels of government in synchronization to really reduce the time taken, because the real ease of doing business comes when multiple agencies involved in the investment process work together.” The current system currently is first submitted to the DPIIT (which operates under the Ministry of Trade) to judge to comply with appropriate laws and sector policies. Read it | Insurance Reforms: Govt to further relax foreign investment rules while increasing the FDI limit to 100%, depending on the nature of the investment, the proposal is sent to other ministries such as finance or home affairs for extra clearance. Depending on the complexity of the proposal and the need for inter -ministerial coordination, the process may take several months. In India, 100% FDI is allowed under the automatic route in most sectors, except for some strategically important people such as defense and atomic energy. The FDI growth palley FDI inflow in India had a peak of $ 84.83 billion in the 2021-22 financial year, according to the data shared on March 10 by the Minister of State of Finance Pankaj Chaudhary in the Lok Sabha. Thereafter, the numbers dropped to $ 71.35 billion in FY23 and $ 71.27 billion in FY24, after uncertainty over a possible global recession, economic crises caused by geopolitical conflicts and increasing global protectionist measures. During the fiscal, the share of insurance, telecommunications and defense industries in FDI stock inflow stood 4.13%, 0.63%and 0.009%respectively, according to Chaudhary’s statement. However, during the first half of the current financial year 2024-25, FDI inflow increased by 26% compared to the first half of the previous financial year 2023-24-which rose from $ 33.51 billion to $ 42.10 billion, as indicated by the Minister of State for Commerce Jitin Prasada in the Lok Sabha on February 11, 2025. BTA talks with us in FY24, the service sector (including finance, banking and insurance) received $ 6.64 billion to FDI, followed by Trade ($ 3.86 billion), non-conventional energy ($ 3.76 billion), hospitals and diagnostic centers ($ 1.53 billion) and electrical equipment ($ 1.5 billion). FDI in the defense sector is allowed to 74% by the automatic route (increased in September 2020 from the previous 49% limit) for businesses seeking new industrial licenses. In addition, 100% FDI in the telecommunications sector is allowed under the automatic route. The sectoral cap for FDI in the insurance sector was reviewed under the automatic route from 49% to 74%. The Union Budget 2025 also announced plans to further increase the FDI sectoral captain for the insurance sector from 74% to 100%. This improved limit applies to companies that invest the entire premium in India. And read | The tariff -fed Nifty Bank can stretch by up to 2% to Fresh High this week, all operating news, bank news and updates on live mint. Download the Mint News app to get daily market updates. More Topics #Investment #FDI Mint Specials