Background: The Union Government introduced significant changes to the Foreign Direct Investment (FDI) framework, and the Department for Promotion of Industry and Internal Trade (DPIIT) has come out with a revised Standard Operating Procedure (SOP) for processing FDI proposals.
1. What are the various changes introduced by way of the fresh SOP recently released by the Department for Promotion of Industry and Internal Trade (DPIIT)?
The freshly released SOP for FDI approvals contains specific timelines for every single stage of the process. According to the approval plan, the final clearance of any FDI proposals would have to be given within ten weeks from the date of its receipt by DPIIT (in situations wherein a security clearance is not necessary). In the event a security clearance is required, the FDI proposals will be cleared within twelve weeks from the application date (additional 2 weeks). Investors must submit twenty three documents, of which nine are considered compulsory, instead of twenty earlier, according to the revised SOP.
2. How does this change in the SOP relate to the outbreak of the Coronavirus pandemic?
In accordance with the revisions brought about in the operation due to the outbreak of the Coronavirus pandemic, applications or documents submitted by an applicant which are digitally signed will be accepted without any human interface. In the event of an unavailability of the same, an extended duration of seven days would be provided to the applicant to produce physical copies for the further processing of the proposal.
3. How does the revised SOP smoothen the process of FDI approvals?
In order to achieve a fast track process, the commerce & industry ministry has recommended administrative ministries to avoid creating inter-ministerial bodies to approve FDI proposals and instead allot it to a select group for clearance within the ministry. This measure has been taken to preserve time with the focus remaining with a select group within the ministry. Additionally, to avoid pendency of FDI proposals, competent authorities are required to hold a regular monthly review of pending proposals and decide on their disposal in a timely manner.
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