India Disbands the FIPB and Endangers BITs: One Step Forward, Two Steps Back?

30 June 2017
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Key takeaways

  • India recently abolished the Foreign Investment Promotion Board, which was responsible for processing foreign direct investment (“FDI”) proposals requiring government approval. Individual ministries and departments are now empowered to approve FDI proposals, in consultation with the Department of Industrial Policy and Promotion.
  • Although this change is intended to provide greater timing certainty for FDI in India, practical implications for foreign investors need to be scrutinised over the coming months.
  • Despite its focus on promoting FDI, the Indian government recently issued termination notices to over 80% of its bilateral investment ("BIT") counterparties. Trading partners have been reluctant to accept new terms based on India’s new model BIT, leading to the presumed termination of 58 BITs, a cause for concern among foreign investors.