Daily Management Review

Indian Government To Approve Some New Chinese Investment In Weeks: Reuters


Indian Government To Approve Some New Chinese Investment In Weeks: Reuters
An easing of tension at their Himalayan borders between India and China has resulted in a thawing in the cold relation between the two neighbours which has potentially prompted the Indian government to seriously consider clearing of some new investment proposals from China as early as within the coming weeks, said a report published by the news agency Reuters quoting information from three government officials from India who had knowledge of the matter.
After an almost nearly nine-month-long standoff after the worst clash between the neighbouring countries since 1962, the two countries agreed to militarily disengage from the Pangong Tso area, in the Ladakh region of the western Himalayas just last week.
A number of policies targeted against China were formulated by the Indian government at the height of the tensions which included blocking Chinese companies from participating in government tenders, making it mandatory for all Chinese companies intending to invest in India to get prior approvals form the government and putting a ban on dozens of Chinese apps.
According to the changes brought in then in the foreign investment rules by India, prior government approval would have to be acquired form the Indian government for any investments from any organization from a country that shares a land border with India. That directly targeted investments in the country from China.
More than 150 proposals from Chinese investors worth more than $2 billion were at stake because of the changes in rules which directly hit expansion plans of Chinese companies in the Indian market. One of the projects hit by the change was acquisition of a General Motors’ plant in India by China’s Great Wall Motors.
“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, according to the Reuters report.
No details of the Chinese proposals that the government was planning to approve with the next few weeks were provided by the government officials. No comment was also available from the Indian prime minister’s office as well as the country’s home ministry.
The report quoted the officials as saying that a few other brownfield projects which are new investments in running projects, would also be considered for approval by the Indian government. However all the projects have to be perceived not to present any risk to India’s national security. This group of approvals could come after the approval of investments in the greenfield projects.
The report also quoted officials as saying that the Indian government is also contemplating allowing some Chinese investments in some specific sectors through the “automatic” route – one that will not require scrutiny of the investment by the government.
The automatic route could be used for investments for acquiring stakes of as much as 20 per cent in “non-sensitive” sectors could be allowed for companies hailing from countries that share a land border with India, the report said.