In a bid to attract more foreign investment, the government is looking at doing away with the mandatory approval of the Reserve Bank of India (RBI) which currently is needed after an investment proposal has been approved by the FIPB.
Till now, the government and RBI shared oversight over direct and indirect foreign investments.
Sources said the Section 6 of the Foreign Exchange Management Act (FEMA) has been amended in the Finance Bill 2015 approved by Parliament earlier this month to delete the requirement of RBI consent for cross-border transactions and acquisition or transfer of immovable property to foreigners.
The Finance Ministry and the Industry Department are working on new norms which would be issued shortly, they said.
Under the proposed mechanism, all foreign investment proposals requiring government approval will only need FIPB (Foreign Investment Promotion Board) nod.
The regulation under FEMA that required foreign direct investment (FDI) proposals to be examined by RBI, is being done away with, they said.
Currently, foreign investment is permitted either through the automatic route or the government approval route. The proposals under the approval route envisaging investment up to Rs 3,000 crore are cleared by FIPB and beyond that require Cabinet nod.
The foreign investment is also subject to sectoral caps which are specified in the FDI policy.
The move is aimed at making it easier for doing business in India. India currently ranks 142 out of the 189 countries on Ease of Doing Business list.