A seven-member empowered group of secretaries (EGOS) will oversee the implementation of investment-related policies and reforms.
Cabinet secretary Rajiv Gauba will chair the group, the central government said on Wednesday. CEO of the policy think tank, the national institution for transforming India (NITI) Aayog, Amitabh Kant is also a member of the group of secretaries.
According to the ministry of industry and commerce, the group has been formed to drive an “investment-friendly and business conducive ecosystem” in India.
“At present, the foreign investment approval mechanism is decentralised, with individual ministries/departments having charge for approving foreign investment under their concerned sector,” Atul Pandey, partner at law firm, Khaitan & Co told TechCircle.
He added that the formation of EGOS will ensure that applications filed by startups seeking foreign investment under the government approval route are not transferred from ministry to ministry, stretching approval timelines.
In April, the government had also issued changes to the Foreign Exchange Management Act (FEMA) making it mandatory for Chinese investors to seek government approval for foreign direct investment (FDI) even in the automatic route. This was done to prevent “opportunistic takeover of Indian companies during the Covid-19 pandemic.” The move is likely to impact Indian startups raising funds from investors from China as well as Chinese investor-backed entities in Singapore and HongKong.
“Given that the EGOS has been established for generally facilitating foreign investments, we expect that applications seeking FDI from China will also come under the purview of the EGOS,” Pandey told TechCircle.
The formation of EGOS comes after the removal of the foreign investment promotion board (FIPB), which served as a single point for FDI matters. FIPB was abolished in 2017 and individual government departments were empowered to clear FDI proposals in consultation with department for promotion of industry and internal trade (DPIIT).