India unlikely to adopt open-door policy for Chinese investments any time soon

 India unlikely to adopt open-door policy for Chinese investments any time soon

FDI only in sectors crucial for India

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The government is likely to approve large Chinese investments in areas that have a minimal Indian presence. However, security clearance will continue to be obligatory in all cases

NEW DELHI

The Centre is unlikely to adopt an open-door policy for Chinese investments anytime soon. However, the government is reportedly considering opening the door to foreign direct investment (FDI) to a limited extent where local manufacturing units don’t have sufficient capacity or in sectors extremely crucial to India’s interests.

Earlier, reports surfaced that the government was planning to start the process approve FDI proposals from Beijing on a “case-by-case” basis, lifting restrictions that were put in place to prevent opportunistic takeovers or acquisitions of Indian companies because of the pandemic.

Worth mentioning here is that security clearance would continue to be compulsory in all cases, and as a part of a standard operating guideline all investment proposals from Beijing are to be examined by the ministry-concerned, Also, the proposals will get clearance those from entities or investors based elsewhere but sending funds through Hong Kong and those that entail small investments by Chinese investors.

“Proposals are being examined as per three key guidelines… Any proposal entailing large investment would have to be in a critical area where there is minimal or negligible local presence,” a government official said. He went on to add that these standard operating procedures(SOPs) direct the approval mechanism.

Agencies

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