NEWS: The Union Cabinet of India has amended the 2020 Foreign Direct Investment (FDI) rules that restricted investments from countries sharing a land border with India, including China.
Press Note 3 (2020)
- India introduced strict rules on FDI from countries sharing land borders with India.
- Any investment from these countries required prior approval from the Government of India
Key Change- At Present
- Companies from neighbouring countries can now invest up to 10% beneficial ownership in Indian companies through the automatic route, provided:
- They hold non-controlling stakes
- Sectoral caps and regulations are followed.
Beneficial ownership
- Refers toà the real person or entity that ultimately owns or controls an investment.
- Even if a company invests indirectly through multiple layersàthe actual controlling entity is considered the beneficial owner.
- The amendment àallows limited beneficial ownership up to 10% without government approval.
Priority Sectors for Investment
Includes
- Electronic capital goods
- Electronic components
- Polysilicon production
- Ingot-wafer manufacturing
- Investment proposals in these sectors will be processed within 60 days.
- The Committee of Secretaries under the Cabinet Secretary can:
- Review and update the list of sectors
- Monitor investments from neighbouring countries