Govt plans to merge DIPP with department of economic affairs

• To bring greater cohesiveness in policy decisions on investment matters, the government is planning to merge the department of industrial policy and promotion (DIPP) with the department of economic affairs.
  
• The move will make for faster turnaround of the government on all investment-related issues.
• The plan will now have to be vetted by the committee of secretaries, headed by cabinet secretary KM Chandrashekhar, which decides on the interdepartmental division of responsibilities within the government.
  
• Explaining the rationale for the move, an official in one of the affected ministries explained that at present, all other departments and even the Reserve Bank of India, usually refer to the department of economic affairs in the finance ministry for guidance on investment policy matters. "It makes sense to therefore unify the department of industrial policy with the finance ministry to cut out unnecessary delays (in decisons)".
  
• A fallout of the merger would be an expanded role for the Foreign Investment Promotion Board (FIPB). The Board is now housed within the finance ministry but is serviced by the DIPP in the commerce and industry ministry.
  
• The department has the responsibility to decide on policy issues regarding industry and, more critically, those related to foreign direct investment. Therfore, after the merger, issues regarding FDI in multi-brand retail and other sectors would fall in the domain of the finance minister.
• The Foreign Investment Promotion Board has over the years simplified the licensing rules for setting up industrial units in India. As a result of the changes, over 90 per cent of the cases that appear on its web site for approval, actually do not need to get any sanction. But company promoters still prefer to get the stamp of approval from a friendly Foreign Investment Promotion Board before attempting to set shop.
  
• Over the reforms period the control of the Foreign Investment Promotion Board has switched hands between the ministries. It was with the Prime Minister's Office during PV Narasimha Rao's time that handled the erstwhile FIB, but during the NDA government, the Board had shuttled between the finance minstry and the commerce ministry. The department of industrial policy and promotion (DIPP) had also been merged with the commerce ministry in the same period.