Centre relaxes FDI rules for China, other countries sharing land borders with India

Approving changes to a rule introduced in 2020, the Union Cabinet on Tuesday eased foreign direct investment norms for companies from countries that share land borders with India, including China.

Under the 2020 rule, companies with shareholders from China, Bangladesh, Pakistan, Nepal, Bhutan, Myanmar and Afghanistan were required to obtain government approval before investing in any sector in India.

With the changes approved on Tuesday, investments from such companies will now be allowed automatically if they do not exceed 10% beneficial ownership and with applicable sectoral caps and other rules, the Union government said.

The Indian company receiving the investment will also have to report the details to the Department for Promotion of Industry and Internal Trade, which functions under the commerce and industry ministry, it added.

The new policy provides for time-bound clearances within 60 days for investments in specific sectors, including the manufacturing of capital goods and electronic components, among others.

A committee of secretaries headed by the Cabinet Secretary may revise the list of these sectors, the government said.

It added that the majority shareholding and control of the Indian company receiving investment must remain with resident Indian citizens or Indian-controlled entities at all times.

The decision comes nearly six years after New Delhi regulated Foreign Direct Investments to curb “opportunistic takeovers/acquisitions of...

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