Definition
FIPB stands for Foreign Investment Promotion Board. It was an inter-ministerial body in India that was responsible for processing applications for foreign direct investment (FDI) which fell under the approval route, in accordance with the FDI policy of the government. However, it was abolished in May 2017 and the responsibility was handed over to the concerned ministries and departments.
Key Takeaways
- The full form of FIPB is the Foreign Investment Promotion Board. It is an Indian governmental body that oversees all the proposals related to foreign direct investment in the country.
- FIPB was established to promote and facilitate foreign investments so as to contribute to the economic growth of India. Its main function was to vet foreign investment proposals, in sectors where there are caps on foreign investments.
- In 2017, the FIPB was abolished to make way for the more liberalised policies of Foreign Direct Investment (FDI). Now, the work of granting government approval for foreign investment is managed by the concerned ministries or departments of the Indian government.
Importance
FIPB, which stands for the Foreign Investment Promotion Board, is significant in the world of finance due to its role in overseeing foreign direct investments (FDI) into a country.
In places like India, the FIPB was responsible for processing applications, implementing guidelines and regulations around FDI, as well as making recommendations to the government on complex investment proposals.
Having a well-structured and efficient investment board like the FIPB helps to attract foreign investors, boost economic growth, and pave the way for technological advancements and job opportunities.
Although FIPB was abolished in India in 2017, its functions are now carried out by respective departments or ministries.
The importance of its role remains nonetheless.
Explanation
The Full Form of FIPB is the Foreign Investment Promotion Board. This was a governmental agency in India under the Ministry of Finance with the responsibility of managing foreign investments into the country.
Established in 1991, the FIPB’s main purpose was to foster economic growth in India while also protecting its interests, primarily through the vetting and approval of inbound foreign investments. The FIPB was aimed at making foreign investments in India more streamlined and clear-cut, mainly by acting as the sole body for approval of proposals.
It offered a single-window clearance for proposals on Foreign Direct Investment (FDI) in the country which did not come under the automatic route. Besides simplifying the procedures and promoting ease of doing business, FIPB also played a crucial role in maintaining the balance between meeting India’s economic goals and ensuring its national security by thoroughly examining the foreign investment proposals.
Examples of Full Form of FIPB
The Full Form of FIPB is Foreign Investment Promotion Board. The FIPB was an inter-ministerial body in India responsible for processing foreign direct investment (FDI) proposals and making recommendations for government approval. Here are three real-world examples of its application:
Vodafone Investment in Hutchinson: One of the prominent cases that involved FIPB was the Vodafone – Hutchinson deal. Vodafone, a British Multinational Telecom Company, bought a 67% stake in Hutchison Essar Ltd, an Indian telecom company. The transaction, which involved international money transfer, required approval from FIPB to ensure it adheres to the country’s FDI policy.
Jet-Etihad Deal: Another high-profile case handled by the FIPB was the Jet-Etihad deal in
Etihad Airways PJSC bought a 24% stake in Jet Airways (India) Ltd. This was the first major case handled by the FIPB after FDI rules were relaxed in the aviation sector.
Walmart’s Entry Into Indian Market: Walmart’s entry into the Indian Market had to pass through FIPB’s scrutiny as well. In 2013, Walmart proposed investing USD 100 million in a new wholesaling venture, and the plan needed clearance from FIPB to ensure that it complied with India’s FDI policy in the multi-brand retail sector.However, please note that the FIPB was abolished in India in 2017, and since then, the approval is now granted by respective ministries or departments in consultation with the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce.
Frequently Asked Questions about FIPB
1. What is the Full Form of FIPB?
The full form of FIPB is the Foreign Investment Promotion Board.
2. What does the FIPB do?
The FIPB is responsible for the clearances of proposals related to Foreign Direct Investment (FDI) in India.
3. Who controls the FIPB?
The FIPB was under the control of the Ministry of Finance, Government of India.
4. Is the FIPB still operational?
No, the FIPB was abolished in May 2017. Now, its responsibilities are handled by the respective departments of the sectors involved.
5. What was the purpose of the FIPB?
The FIPB was created with the purpose of promoting foreign investment into India through a streamlined and standardized system for applying and obtaining approvals for FDI.
Related Entrepreneurship Terms
- Foreign Direct Investment (FDI)
- Foreign Investment Promotion Board (FIPB)
- Ministry of Finance, India
- Economic Reforms
- Foreign Investment Policy
Sources for More Information
- Investopedia: This is one of the leading sources of financial information on the internet, covering a wide range of topics.
- Economics Help: This website aims to help people understand economics, including finance-related topics like FIPB.
- Encyclopedia Britannica: This well-trusted resource can provide encyclopedic knowledge on a wide range of subjects, including finance and FIPB.
- Bloomberg: The renowned business and financial information website can provide useful insights into the FIPB and its relevance in today’s financial world.
