To expedite the overall approval process, the Home Ministry has agreed to provide security clearance within three months as far as possible for foreign direct investment proposals, the government said on Friday.
Minister of State for Commerce and Industry Nirmala Sitharaman acknowledged that concerns have been expressed by sectoral ministries/departments relating to delay in security vetting of FDI proposals, including those in strategic sectors like aviation and telecom.
She informed Lok Sabha that as decision on issues relating to national security are taken with due care, the delay if any are part of the process of due diligence.
“Ministry of Home Affairs has recently agreed to provide security clearance within twelve weeks, as far as possible, to expedite the process,” Sitharaman said.
She noted that while Home Ministry sends FDI proposals immediately to central agencies, obtaining comments/inputs from them is a time consuming process as it entails collection of information from field formations.
“Ministry of Home Affairs earnestly evaluates the reports in a time bound manner without causing any delay. In some cases, further details are sought from nodal ministries and also clarification from central agencies relating to the inputs received,” Sitharaman said.
Meanwhile, the Minister said that fluctuations in FDI in the last three years have been due to macro-economic constraints rather than inter-departmental issues.
In the last three years there have been fluctuations in FDI inflows, that touched USD 36.39 billion in 2013-14 period.
Sitharaman said there have been “a great lot of fluctuations” in inflows in the last three years.
There have been fluctuations (in FDI inflows) due to macro economic constraints rather than inter-departmental issues, she noted.
She was responding to a query on whether FDI inflows were impacted due to inter-departmental issues in recent times.
“Under the liberalised economic environment, investment decisions of investors are based on the macro-economic policy framework, investment climate in the host country, investment policies of the trans-national corporations and other commercial considerations,” Sitharaman said.
According to the Minister, FDI inflow decreased by 26.35 per cent during the financial year 2012-13 in comparison to fiscal 2011-12 and increased by 6.12 per cent in 2013-14 compared to 2012-13.
With regard to allowing FDI in various sectors, she said, “Consultation process for allowing/enhancing FDI in sectors such as Railways and Defence has been initiated.”
She also asserted it is the government’s decision to allow 49 per cent FDI in the defence sector.
In his Budget speech on Thursday, Finance Minister Arun Jaitley said the composite cap of FDI is being raised to 49 per cent in defence sector with full Indian management and control through the Foreign Investment Promotion Board (FIPB) route.