The Foreign Investment Promotion Board (FIPB), a 25 year old institution that offered a single window clearance for all foreign direct investment (FDI) in India, under the approval route, has now been abolished. The Union Cabinet has now cleared the dismantling of the FIPB on 24 May 2017 in keeping with the declaration made by the Finance Minister during the presentation of the Union Budget.

Following is a brief summary of the legal ramifications of the abolition of the FIPB:


  • FDI proposals that must comply with the approval route shall now be cleared by the concerned government ministry instead of the FIPB;


  • FDI proposals, pending before the FIPB shall now be sent to the concerned ministries for approval;


  • The approvals will now have to be approved in a time bound manner;


  • Rejection by the department concerned has been made difficult as it will now mandatorily require concurrence of the Department of Industrial Policy and Promotion (DIPP);


  • A standard operating procedure (SOP) will be issued by the DIPP for facilitating the processing FDI applications;


  • All FDI from Pakistan and Bangladesh and FDI proposals requiring approval in private security agencies and manufacture of small arms have to be approved by the ministry of home affairs.




The abolition is in line with governments' aim of improving the ease of doing business in India. This will certainly streamline and accelerate the process of FDI proposals as it shall now be approved by the concerned ministries themselves, instead of unconnected officers at the FIPB. However, much will depend on the alternate FDI approval plan, to be notified by the Government.

This update was released on 26 May 2017.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or for any assistance.

Legal Update Team
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