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Foreign direct investment (FDI) proposals from countries with which India shares its land borders, including China — that are no longer eligible for automatic approval in the country — will have to be approved by the ministries and departments concerned, while an inter-ministerial committee will evaluate the proposals initially before pushing them forward.
“An inter-ministerial committee will go through all the FDI proposals that have come from the countries with which India shares a land border. The committee will examine what kind of applications have come from which countries and in what sectors, and how much investments they are seeking to make. It will not act as an approval committee as the proposals will be forwarded to the relevant ministries and departments for a final decision,” an official told BusinessLine .
Apart from China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan share land borders with India.
There are more than 100 FDI proposals from the bordering countries that need to be evaluated, the official added.
Amendments notified
The inter-ministerial committee comprises senior officials from Ministries and Departments such as Home, Finance and Commerce and Industry. This April, the government made it mandatory for countries that share land border with India to get prior approval for FDI.
This was done to curb ‘opportunistic takeovers’ of domestic firms following the pandemic. While China was not named specifically in the order, the move has been widely interpreted as one designed to keep a check on rising Chinese investments in India. The amendments to the FDI policy were also notified under the Foreign Exchange Management Act, 1999 (FEMA).
On whether the scrutiny by the inter-ministerial committee could lead to rejections of FDI proposals, the official said if there were concerns related to certain proposals, those might be further investigated and intimated to the ministries and departments concerned with the specific sectors.
“The Centre is very clear that while the initial vetting of the proposals will be done by the inter-ministerial body, it will not take a final decision which will be the prerogative of the line Ministry or Department,” the official said.
As per data compiled by the Department for Promotion of Investment and Internal Trade (DPIIT) data, India received FDI from China worth ₹14,846 crore ($ 2.34 billion) between April 2000 and December 2019. In the same period, FDI worth ₹48 lakh ($0.08 million) came in from Bangladesh; ₹18.18 crore ($3.25 million) from Nepal; ₹35.78 crore ($8.97 million) from Myanmar, and ₹16.42 crore ($2.44 million) from Afghanistan.
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