India’s FDI rule change had put in limbo over 150 proposals from China worth more than $2 billion. (Representative image)
NEW DELHI: India is poised to clear some new investment proposals from China in the coming weeks as frosty relations between the two neighbouring countries thawed amid an easing in border tensions, said three government officials with knowledge of the matter.
Last week, India and China began disengagement from the Pangong Tso area, in the Ladakh region of the western Himalayas, following a nearly nine-month-long standoff after the worst clash between the neighbouring countries since 1962.
At the height of the tensions, India framed various policies targeting China, including blocking the nation from participating in government tenders, compelling any Chinese company investing in India to seek approvals and banning dozens of Chinese apps.
The foreign investment rule change by the government said investments from an entity in a country that shares a land border with India would require government approval, markedly slowing investments flows from China.
The rule change had put in limbo over 150 proposals from China worth more than $2 billion, hurting the plans of Chinese companies in India.
Among the proposals delayed was China’s Great Wall Motors’ acquisition of a General Motors’ plant in India.
“We’ll start giving approvals to some greenfield investment proposals, but we will only clear those sectors which are not sensitive to national security,” one of the officials said.
The officials, who asked not to be named as the discussions are private, did not give details of the proposals they plan to clear in the coming weeks.
The prime minister’s office did not immediately respond to an email seeking comments, while the home ministry did not respond to an email, call or message.
The government will also look to clear some other brownfield projects – new investments in existing projects – that are not a risk to national security after the first round of clearance to new investments, the above officials said.
The government is also considering allowing some investment from Chinese firms in certain sectors via the “automatic” route, or without government scrutiny, said the officials.
The officials said investments for stakes of up to 20%, in “non-sensitive” sectors, may revert to the automatic route for nations with which India shares land borders.
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Desley Sherwin, senior associate at Roythornes.