Advantages of FIPB

1. Speedy Approval of Project: The Foreign Investment Promotion Board (FIPB) facilitates the speedy approval of project proposals and foreign direct investment (FDI) funding. With FIPB, businesses and corporations can quickly raise funds within the FDI quota authorised by the government of India.

2. Promotes Inflow of FDI and Other Programs: A considerable inflow of FDI capital and the transparency maintained by the FIPB demonstrate the credibility of the businesses. Foreign Direct Investment (FDI) has the potential to significantly improve the business environment and infrastructure of a sector. Besides, to bridge the gap between businesses and investors and promote FDI in the domestic sector worldwide, the FIPB has undertaken several programs.

2. Less Paperwork: For FIPB limit funds (less than ₹1200 crore), the paperwork and regulations needed are limited and simple to handle.

3. Optimise Production Costs: Local businesses and players have access to overseas markets and resources, which helps them to optimise production costs.

Disadvantages of FIPB

1. Duplication of Efforts: The main drawback of the FIPB’s is that some of the committee’s active wings still approve FDI inflows. This leads to confusion and sometimes duplication of effort.

2. Poses Problem for Local Businesses: With FIPB, local players are unable to compete because of the FDI funds’ low costs, which the FIPB purchased by acting against the local investing opportunity. Local businesses struggle to compete with the competence and quality of global competitors, which affects the economy.

3. Increases Cost: Since so many tasks may end up being repeated due to the approval procedure, the process’ overall cost will increase. Additionally, it will add to the Indian investee’s coordination burden, defeating the objective of accelerating the process.

FIPB is made up of representatives from many ministries to determine, regulate, and manage the required FDI level in each sector or industry. Before deciding on the quantity of permitted FDI for each industry, the board conducts extensive research on each sector. The board also makes sure that the flow of funds into the economy continues to be transparent and efficient. Arun Jaitley, who was the finance minister at the time, abolished the Board and replaced it with the Foreign Investment Facilitation Portal (FIFP). The FIFP has taken over the duties and obligations of the FIPB, and it has just helped promote FDI approval again.