Govt plans single-window FDI nod

MUMBAI: The finance ministry is putting in place a single-window system for clearance of foreign direct investment proposals – a job it is taking over from the Reserve Bank of India – in a bid to speed up the process. With the setting up of the new office the government is also expected to take a call on RBI’s move to double foreign exchange remittance for purchase of immovable property to $2.5 lakh – a proposal that has been hanging fire since February for want of government clearance.
Regulations on purchasing immovable property overseas by Indians and foreigners in India, which was the domain of the Reserve Bank of India (RBI), will now be notified by the government.The government would also regulate the norms pertaining to foreign individuals and firms purchasing property in India. Until recently, the RBI had been deciding on liberalizing or tightening remittance norms for individuals as part of its exchange-control mechanisms. During times of heavy capital inflows, the central bank would relax the investment limit and tighten these caps when the rupee came under pressure.
In his budget speech this year, finance minister Arun Jaitley had said that regulation of foreign direct investment in the nature of equity was a policy decision and henceforth would be determined by the government. Debt inflows would continue to be regulated by the central government.
Following the passage of the budget, a provision in the Foreign Exchange Management Act (FEMA) that allowed the RBI to restrict or regulate cross-border transactions and acquisition or transfer of immovable property to foreigners has been deleted.

Sources said that while the government would seek to hasten clearance of approvals by having a ‘single-window’ approach, there would also be scrutiny to ensure that the inflows were indeed equity. “For instance, an equity investment with assured returns to the investors would be more in the nature of debt,” the source said.