The Foreign Investment Promotion Board (FIPB) can now clear foreign direct investment (FDI) proposals of up to Rs 1,200 crore under the new relaxed norms by the government.

The FIPB had the authority to clear proposals only up to Rs 600 crore and the proposals with higher amounts were cleared by the Cabinet Committee on Economic Affairs. This cap was fixed in July 1996.

The new rules state that projects with equity investments will only be referred to the CCEA and not on the basis of project costs. This has increased the levels of project costs which could be cleared by the FIPB by Rs 600 crore.

The FDI inflow into the country is increasing. The FDI for the month of December was 13% higher at $ 1.542 billion from a year ago. In the first nine months of the financial year the FDI stood at $ 20.92 billion against $21.15 billion in the corresponding period in 2008.

The projects which have attained the approvals under the earlier arrangement will not be required to apply for approval again. The new rules also state that the entities will not have to take a fresh approval for investments in sectors under Press Note 18 or Press Note 1 if they have already received approval for any investments in the same sector.

Union Home Minister P Chidambaram said, “With this liberalisation, approval is expected to save time and efforts for the FIPB and CCEA and also expedite foreign investment inflow.”

Analysts believe that the changes in rules will make the process of approval faster and will result in higher investor confidence.

Industry bodies also gave a positive response to the changes and said that it will being transparency in the FDI regime and boost investor confidence in India as an investment destination.

In another development, the CCEA has changed rates of concession applicable to two grades of complex fertilizers. The move is to help Rashtriya Chemicals and Fertilisers cover the under-recovery of Rs 15.95 crore incurred by it due to higher gas prices.

The committee also gave its approval to a proposal worth Rs 370.97 crore to increase the number of seats in Post-Graduate Institute of Medical Education and Research in Chandigarh.