India Eyes Higher FDI Approval Limit to Rs 15,000 Crore
By Business Desk
India considers raising FDI approval threshold to Rs 15,000 crore from Rs 5,000 crore to streamline foreign investment and empower ministries with faster clearances.
India’s government is considering easing Foreign Direct Investment (FDI) norms to simplify approvals. A key proposal involves raising the threshold for Cabinet Committee on Economic Affairs (CCEA) approval from Rs 5,000 crore to Rs 15,000 crore.
Streamlining Approval Mechanisms
This proposed adjustment would empower individual ministries to clear larger investment proposals directly. Such a change could significantly shorten approval timelines for foreign capital inflows. The existing Rs 5,000 crore limit has been in place since November 2015.
Another reform targets simplifying rules for downstream investments by Indian subsidiaries. Under this new framework, a fresh government approval might not be needed if the parent or upstream entity has already secured necessary clearances.
Key Elements of the Proposed Reforms
The government proposes to raise the CCEA approval threshold for FDI proposals from Rs 5,000 crore to Rs 15,000 crore. This significant increase aims to decentralize approval power.
Rules for downstream investments by Indian subsidiaries are also slated for simplification. This means avoiding duplicate government approvals when a parent entity has already cleared its investment.
Impact and Consultations
These proposed changes are part of a broader government initiative to enhance the ease of doing business in India. The primary objective is to attract more overseas investments and reduce bureaucratic hurdles.
The government held consultations with approximately 70 stakeholders on August 19 to gather feedback on these proposals. These inputs will be reviewed before finalization.
If implemented, the reforms are expected to reduce duplication in approvals and offer greater certainty to multinational corporations. This will facilitate their expansion plans within India.
Currently, over 90% of FDI inflows into India already occur through the automatic route. The proposed changes specifically address the portion requiring government approval.