The government is considering a revamp of the foreign investment clearance mechanism with changes in the Foreign Investment Promotion Board, Foreign Investment Implementation Authority and the Secretariat for Industrial Assistance in addition to the constitution of the Investment Commission.
The finance ministry also proposes to incorporate the changes in the foreign institutional investment regime proposed by a committee headed by Chief Economic Adviser Ashok Lahiri though the external commercial borrowings policy is proposed to be continued without changes.
The committee had recommended that the FII cap should be kept out of the FDI limit in most sectors. It had also proposed FIIs should not be allowed to invest in sectors barred for FDI.
Senior officials said the government intended to put a host of subjects requiring clearance from the FIPB on the automatic route.
"The system was evolved when the economy was opened up in the early nineties. They are not in sync today," an official said.
Once the changes are incorporated, companies transferring shares held by non-resident Indians to residents will not be required to approach the FIPB. The other details of the changes are being worked out.
The move comes close on the heels of Prime Minister Manmohan Singh's announcement to remove bureaucratic hurdles for investors.
The officials said the finance ministry had forwarded a Cabinet note on the Investment Commission, which will act as the interface between the government and industry.
The commission's members will interact with international companies and try to sell India as an investment destination.
The feedback on bottlenecks from potential investors will form the basis for the government's policy. A part of the job is already being handled by the FIIA, which is headed by the secretary, department of industrial policy and promotion, and is mandated to ensure quick implementation of FDI approvals and assist investors in obtaining clearances.
The FIIA, established in 1999 during P Chidambaram's previous stint as finance minister, has been holding deliberations with the companies that have received permission to invest in India but the inflows are yet to materialise.
The SIA's role was redefined during the nineties to provide a single window for entrepreneurial assistance, investor facilitation, processing of applications and conveying government decisions. It also notifies all policies related to investment and technology.