Government of India keen on easing norms for business start-ups

The Dollar Business Bureau

The Government of India seems to be very keen towards easing the norms and regulations for the business start-ups in the country. Towards this move aimed at increasing ease of doing business environment, the government intends to reduce the list of prior approvals for easing the norms for upcoming businesses. Moving ahead, the Ministry of Commerce & Industry, according to a latest release, has invited the stakeholders’ comments over the draft legislation for replacing the system involving multiple prior permissions with a pre-existing regulatory mechanism. The Department of Industrial Policy and Promotion (DIPP), Government of India, with the approval of competent authority, has constituted an Expert Committee in March 2015. The Committee, set up by the DIPP, under its terms of reference, intends to replace the system of multiple prior approvals for starting a business with the pre-existing regulatory mechanism and also proposes draft legislation for the purpose. The Committee intends to study the requirement of various prior permissions with an exhaustive inventory of such permissions and replace the system with the proposed pre-existing regulatory mechanism. Meanwhile, the Cabinet Committee on Economic Affairs (CCEA), on Wednesday, approved the DIPP’s proposal seeking review of the investment limit for cases requiring prior approval of the Foreign Investment Promotion Board (FIPB)/CCEA, as provided in the Consolidated FDI Policy Circular effective from April 17, 2014, says an official release on Wednesday. As per the amended provisions, the Ministry of Finance, which is heading the FIPB would be considering the Board’s recommendations on proposals with total foreign equity inflow up to Rs 3000 crore, the release added. And, the proposals involving the cases with total foreign equity inflow up more than Rs 3000 crore would further be placed for consideration of CCEA, which would also consider the proposals made. As per the amended provisions, the FIPB Secretariat with the Department of Economic Affairs (DEA) will process the FIPB recommendations to obtain the approval of Minister of Finance and the CCEA. Under the FDI policy, as of now, for most of the sectors that are under automatic route, the intimation is only required to be given to the Reserve Bank of India (RBI) and no approval is required from the FIPB/CCEA. Besides, no limit for foreign investment has been prescribed for the automatic route. However, the approval route cases are decided by the FIPB only if the investment is less than Rs 2000 crore. Now, with the latest decision and amended provisions, the approval processes of proposals are expected to go through an expeditious manner and the decision is also expected to result in increased foreign investment inflows, added the release.      

May 7, 2015 | 4:59 pm IST.