According to some sources, the Indian Government is reviewing around 50 investment proposals involving Chinese companies under a new screening policy. In April, the government announced its decision that there will be a prior requirement of approval by the central government for the investments from entities of neighbouring countries. The government has taken this decision to prevent China from taking advantage of the COVID situation and make opportunistic takeovers.
China has criticised this move by the government and said that the policy is discriminatory. According to industry executives, escalating tensions after recent skirmishes between India and China at LAC could further delay approvals. In this context, a senior government official said, “Various clearances are required. We are being a bit more cautious as one would imagine”.
Sources said, “About 40-50 applications involving funding from Chinese investors have been filed since the rule change and are currently under review”. One of them said that multiple government agencies, including the Indian consulates in China, are in touch with investors and their representatives to get the clarifications on the proposals.
Law firm Krishnamurthy & Co’s partner, Alok Sonker said, “At least 10 Chinese clients had sought his advice in recent weeks for investing in India, but were waiting for more clarity on the policy outlook in India”.
He added, “Uncertainty in timelines for the investment approval is dissuading parties, both Indian and Chinese, from proceeding with business as usual”. In March, Research group Brookings said, “Chinese companies’ existing and planned investments in India stand at more than $26 billion”.