Govt expedites FDI from neighboring countries

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What is the News?

The Government of India is fast-tracking the approval process for Foreign Direct Investment(FDI) from countries that share a land border with India.

Background

In April 2020, the Government of India had made prior government approval mandatory for foreign direct investments(FDI) from countries that share a land border with India or where the beneficial owner of an investment is situated in such country.

This was done to curb opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic and amid rising tensions with China.

What is the Government doing now?

The Government of India is expediting the approval process for Foreign Direct Investment(FDI) from countries that share a land border with India. For example, pending investment proposals from these countries have shrunk to a third over the past four months.

Further, the Government is also considering a 25% “beneficial ownership” threshold for investments from these countries to determine if they need to go through an approval process at all.

However, India is also cautious of Chinese investments. The tensions between India and China escalated in 2020 after soldiers clashed on the disputed Himalayan border. India has since then clamped down on Chinese investments, especially in sensitive industries, and banned several Chinese phone apps among other steps. 

Source: This post is based on the article “India to help Sri Lanka launch its version of Aadhaar” published in Hindustan Times on 9th Feb 2022.

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