PN 3 relaxation may clear FDI route for funds with minority China stake

THE GOVERNMENT IS considering a proposal to exempt foreign funds with Chinese investments below a specified threshold from the elaborate scrutiny mandated under Press Note 3 (PN3), Commerce and Industry Minister Piyush Goyal told FE on Friday.

- MUKESH JAGOTA

“There is a thought before us on whether we could have a de minimis threshold. There are many international funds that may have a small 1-5% Chinese investment in a large fund and want to invest in India. They also have to go through an elaborate process under PN3, and time is lost,” Goyal said in an interview.

He added that the government remains open to reviewing the policy. “This is a listening government. We are always open to new ideas. We are engaging with all stakeholders to make it easier to do business and attract investments. All options are being explored, and decisions will be taken in the national interest,” he said.

Any such move would mark a significant relaxation of PN3, which was introduced in April 2020 at the height of the Covid-19 pandemic. The rule added an additional layer of security scrutiny for investment proposals from countries sharing land borders with India.