No FIPB Approval for M and As Under Automatic Route

Published: 28th May 2015 06:00 AM  |   Last Updated: 28th May 2015 06:00 AM   |  A+A-

NEW DELHI: The government on Wednesday said the Foreign Investor Promotion Board’s (FIPB) approval will not be required for merger and acquisitions (M&As) in sectors where FDI is allowed under automatic route.

The move is aimed at further improving the ease of doing business in the country.

“FIPB approval would not be required in case of mergers and acquisitions taking place in sectors under automatic route,” the Department of Industrial Policy and Promotion (DIPP) said in a circular.

It added that the government permission was also not required for issuing ESOPs (Employees Stock Option Plan) in sectors under automatic route.

Currently, FDI  is permitted either through the automatic route or the government approval route.

Foreign investments are considered crucial for India, which needs about $1 trillion over five years (2012-17) to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

Sectors, which attracted maximum FDI include services, telecom, metallurgical industries, power, computer hardware & software and construction.

Early this year, the Ministry of Commerce and Industry increased the value of projects to be cleared by FIPB from Rs 1,200 crore to Rs 3,000 crore besides introducing a composite cap, which will include FDI, FII and other instruments in various sectors.

The government’s move to make passage of foreign investments easier is aimed at making India an business-friendly destination. The country, currently ranks 142 out of the 189 countries on the ‘Ease of Doing Business’ list.


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