In a move that will further liberalise foreign direct investment (FDI) inflows, the government is considering raising the threshold for large FDI projects requiring the approval of the Cabinet Committee on Economic Affairs (CCEA) from Rs 5,000 crore at present to Rs 15,000 crore.
Currently, all FDI applications that need government approval and involve investment of less than Rs 5,000 crore can be approved by the Ministry or department overseeing the sector concerned. If the new proposal is implemented, ministries and departments will get power to approve investments up to Rs 15,000 crore.
“Prevailing economic conditions, inflation, the growing scale of investments over the years, and the objective of promoting ease of doing business necessitate a review of the existing threshold,” sources said.
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The limit was last revised in March 2016 to Rs 5,000 crore from Rs 3,000 crore. Before 2010, all FDI proposals worth more than Rs 600 crore went to CCEA for approval. In February 2010 it was raised to Rs 1,200 crore, and then by April 2015 to Rs 3,000 crore.
This liberalisation in limits was accompanied by abolition of Foreign Investment Promotion Board (FIPB) in May 2017.
This latest proposal follows a series of steps taken by the government to boost foreign investment inflows as the rupee and current account came under pressure. While overseas debt raising has brought in substantial short-term funds, FDI will deliver long-term investments.
Last week, the government operationalised FDI in e-commerce for exports. It is also considering a proposal to exempt foreign companies from obtaining fresh approvals for downstream investments.
In May the Department for Promotion of Industry and Internal Trade (DPIIT) revised the Standard Operating Procedure (SOP) for Processing FDI proposals. This was done to streamline and digitise the approval framework for FDI proposals requiring government nod.
The SOP replaces the earlier 2017 framework and introduced expanded compliance, disclosure and monitoring requirements. It extends the disposal time line to 12 weeks from 10 weeks. It, however, puts a fixed timeframe even for security clearance from the Ministry of Home Affairs (MHA) and approvals from the Ministry of External Affairs (MEA) and Reserve Bank of India (RBI).
Under the new procedure for FDI clearance, all consulted Ministries and Departments, including RBI, MHA and MEA shall provide their comments within the prescribed timeline. If comments are not received within the prescribed time, it shall be presumed that they have no comments to offer.
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In 2025-26 India received gross FDI of $ 94.53 billion. Net FDI inflows, however, declined to less than $1 billion in FY25 from a high of $44 billion in FY21. Net inflows improved to $6.9 billion in FY26.
Economists project net FDI inflows to rise to a four-year high of around $15 billion in FY27.
According to Invest India leadership the country is on track to attract an average of $100 billion in annual FDI over the next seven years if present trends sustain.
TOPICSFDIForeign Direct Investment (FDI)This article was first uploaded on August nine, twenty twenty-six, at ten minutes past six in the evening. © The Indian Express (P) Ltd