Financial Daily from THE HINDU group of publications
Tuesday, Dec 17, 2002
Foreign Direct Investment
Government - Policy
Project investments above Rs 100 cr New board for quicker approvals
NEW DELHI, Dec. 16
THE Union Government is in the process of having an institutional arrangement in place to facilitate the grant of approvals, without undue delay, to projects with investments worth more than Rs 100 crore, including foreign direct investment (FDI).
As per the recommendations of the Govindarajan Committee Report on `Reforming Investment Approvals & Implementation Procedures', the Government is planning to set up an Industrial Investment Facilitation Board (IIFB) in the Department of Industrial Policy & Promotion (DIPP) for follow-up of the grant of approvals by the Central Ministries and other agencies.
Apart from reviewing the grant of such approvals to projects involving investments exceeding Rs 100 crore, the high-powered board will also entertain the grievances of any investor experiencing difficulties in obtaining approvals, irrespective of the investment limits. In effect, IIFB will also look into the delays pertaining to approvals by the Foreign Investment Promotion Board (FIPB)
This, as referred to by the Prime Minister, Mr Atal Bihari Vajpayee, at the FICCI annual session on Friday last week, forms a part of the initiative taken by the Government to "increase the GDP growth rate by at least a couple of percentage points without any additional financial investments, but by carrying out necessary governance reforms at various levels."
"The committee's recommendations, which are now under implementation, will have a profound effect on the execution of physical and social infrastructure projects and transform the character of business-government interface," Mr Vajpayee had said.
The Chairman of IIFB is to be the DIPP Secretary, with the Secretaries of the Ministries of Law, Power, Labour, Small-scale Industries, Environment & Forest and Road Transport & Highways as members. Depending on the projects under consideration, the board, if need be, can also co-opt officials of the Ministries and State Governments concerned.
The board, in turn, will set up a sub-committee to prescribe time limits for the grant of various non-statutory approvals in consultation with the administrative Ministries concerned.
For cases involving excessive delays in approvals, IIFB is to refer them to a Group of Ministers (GoM), which will take them up for resolution. The GoM will also be free to co-opt the Minister of the department concerned.
According to the committee recommendations, the board should interact at least once every three months with the investors on the factors impeding implementation of projects and deliberate on the scope for further simplification of procedures.
While IIFB will be looking at specific difficulties faced by projects in the private sector, the Foreign Investment Implementation Authority (FIIA) will continue to look after the specific cases of foreign investment where project promoters encounter delays in implementation.
The Govindarajan Committee has also suggested that facilitation teams comprising representatives of the Ministries involved in the regulatory clearances and the State Government concerned be established for projects, both public and private, with outlays of Rs 100 crore and above as also other priority projects to be identified by the Cabinet Committee on Economic Affairs (CCEA), for coordination and follow-up with different agencies for issue of necessary approvals.
The committee said the establishment of empowered "Single Window Mechanism" at the State level, either under a special legislation or through alternate arrangements such as amendment in the Rules of Business etc., needed consideration.
The State-level "Single Window Agency", it had suggested, should be empowered to lay down the time frame for approvals, review the issue of approvals by the agencies and departments concerned and accord approvals in case they do not grant these approvals in a pre-determined time frame.
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