Mumbai: The finance ministry has put up 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 norms pertaining to foreign individuals and firms purchasing property in India. Until recently, the RBI had been deciding on liberalising 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.
However, in another statement, Arun Jaitley has said that BJP was “never” in favour of allowing foreign direct investment in multi-brand retail.Â
The BJP manifesto had said, barring the multi-brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation, infrastructure and acquisition of niche technology and specialised expertise.
Though Arun Jaitley belongs to BJP, which also forms the ruling party opposing the FDI at multi-brand retail sector, he has regulated the FDI policy decisions.
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, a source said. For instance, an equity investment with assured returns to the investors would be more in the nature of debt, the source added.