Foreign investors are increasingly preferring the automatic route for investing in India. Under this system, foreign direct investment proposals are channeled directly through the Reserve Bank of India instead of being routed through the Foreign Investment Promotion Board, the Cabinet Committee on Economic Affairs and other bodies.

An official said during the year as much as 60-70 per cent of the total FDI proposals went to the RBI.

In fact, several proposals cleared by the Foreign Investment Promotion Board also featured on the RBI list.

Between August and October 2003, proposals for foreign collaborations -- both financial and technical -- approved by RBI stood at 210 as compared with 200 proposals cleared by FIPB.

Yet, in value terms FIPB cleared more FDI than the RBI, primarily because mergers and acquisitions, open offers of shares by listed entities, and capital restructuring still required clearance from FIPB and government, and the CCEA if the project cost was more than Rs 600 crore (Rs 6 billion).

The FIPB cleared proposal worth Rs 1,390 crore (Rs 13.9 billion) in the August-October 2003 period, while proposals cleared by the RBI was Rs 350 crore (Rs 3.5 billion). Since January 1991, the FIPB has cleared proposals worth Rs 261,300 crore (Rs 2,613 billion) while the RBI cleared only around Rs 22,210 crore (Rs 222.1 billion) worth of FDI.

The balance Rs 5,960 crore (Rs 59.6 billion) was cleared by the Secretariat of Industrial Assistance in the commerce and industry ministry. The FIPB is now a part of the union finance minister.