40-50 FDI Proposals From Countries Sharing Borders With India Pending Approval: Report

Under the provisions of Press Note 3, the government has mandated prior approval for foreign investments from countries that share a land border with India, including China, Pakistan, and Afghanistan

Around 40 to 50 foreign direct investment (FDI) proposals from India's border-sharing countries, are reportedly awaiting government approval. These proposals are pending under the provisions of Press Note 3, news agency PTI reported. Under the provisions, the government has mandated approval for foreign investments from countries that share their borders with India.

These countries include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan. As a result, FDI proposals from these nations require government approval for investments in any sector within India. The government introduced Press Note 3 in April 2020 to prevent opportunistic takeovers of domestic firms during the COVID-19 pandemic. 

"About 40-50 proposals are pending with the commerce and industry ministry as they require security and political clearances," one of the sources told the news agency adding that there is no consideration at present to ease norms under this press note.

"FDI is not totally banned from these countries. It is just that they (investors from these countries) have to follow the government approval route and of course that takes time," a source said, as per the report. 

The report noted that although the government has a commitment to clear these proposals within a three-month timeframe, the actual process often takes around seven months.

MG Motor, a British brand owned by China's largest automaker SAIC Motor Corp, has been awaiting government approval for around two years now to raise funds from its parent, an industry source told PTI. 

MG Motor India has recently announced its intention to sell a majority stake to local partners and investors within the next 2-4 years. The move is aimed at securing approximately Rs 5,000 crore in capital to support the company's future growth in the country. Despite previous attempts to raise funds for expansion, MG Motor has faced limited success and is now exploring alternative avenues to meet its capital requirements.

The report said that in order to review these proposals, an inter-ministerial committee has been established by the government. Additionally, administrative ministries and departments have been instructed to establish dedicated FDI cells to efficiently process these proposals.

From April 2000 to March 2023, India received $2.5 billion in FDI equity from China, according to the news agency. During this period, India received $0.076 million investments from Bangladesh, $3.31 million from Nepal, $9 million from Myanmar, and $2.57 million from Afghanistan. 

In the previous fiscal year, total foreign direct investment (FDI) inflows into India, including equity inflows, reinvested earnings, and other capital, decreased by 16 per cent to $70.97 billion compared to $84.83 billion in 2021-22. This decline can be attributed to reduced inflows in significant sectors such as automobiles, computer hardware, and software.