The Department for Promotion of Industry and Internal Trade (DPIIT) has issued an updated standard operating procedure (SOP) for processing foreign direct investment (FDI) proposals, introducing a defined 12-week timeline and a completely paperless application system, PTI reported.Under the revised framework, decisions on FDI proposals will be taken within 12 weeks, excluding the time taken by applicants to rectify deficiencies or provide additional information sought by the authorities.“This SOP aims to make the process of filing FDI applications completely paperless. Therefore, applicants will not be required to file physical copies of any documents required to process FDI proposals,” DPIIT said.The SOP mandates a digital, paperless system for filing applications through the Foreign Investment Facilitation Portal (FIF) and the National Single Window System (NSWS) for all proposals requiring government clearance under the FDI policy and FEMA rules.DPIIT will act as the nodal body under the new framework, sending proposals to line ministries and also seeking inputs from the Reserve Bank of India (RBI), Ministry of Home Affairs (MHA) and Ministry of External Affairs (MEA) for security clearance.The process aims to eliminate duplication and ensure timely decisions, with timelines ranging from initial investigation within two weeks to final approval in approximately 12 weeks. If comments are not received within the stipulated period, they will be treated as “No Objection”.As per the SOP, all applications involving investments from countries sharing land border with India will be sent to the Ministry of External Affairs for comments or approval within the prescribed time limit. Other proposals may also be referred to where necessary.SOP offers fast processing as well as strict compliance inspection. Investments in sensitive sectors such as defence, telecom and civil aviation will require mandatory security clearance, while larger proposals may be referred to the Cabinet Committee on Economic Affairs (CCEA).It allows closure of incomplete applications, withdrawal of applications by applicants, and mandates the consent of DPIIT before rejecting proposals or imposing additional conditions. Ministries will be responsible for monitoring compliance, with violations attracting penalties under FEMA.The revised norms require all consulted departments, including RBI, MHA and MEA, to respond within specified timelines, failing which their views will not be considered as an objection.In the previous SOP issued on June 29, 2017, a maximum time of 10 weeks was fixed for approval of FDI proposals.Commenting on the changes, the Global Trade Research Initiative (GTRI) said the framework would improve efficiency but keep compliance requirements high.Ajay Srivastava, Founder, GTRI, said, “The SOP will improve the ease of doing business by making FDI approvals fast, transparent and completely digital with clear timelines. However, strong inter-agency scrutiny and security checks mean that compliance will remain in demand.”He said that although the move is a positive step, India needs more reforms. “While a welcome step, India must simplify regulations, cut compliance costs and reduce the cost of doing business to attract high-quality, long-term investments in manufacturing and advanced sectors,” he said.
