India Mulls Easing Controls to Attract China Investments

India is exploring whether a company with a small shareholding from a China-based or connected entity can be considered a 'Chinese' firm, said three people aware of the matter, as New Delhi prepares to ease curbs on investments from its neighboring nation to counter US tariffs.

- Utpal Bhaskar & Dhirendra Kumar

Under the Press Note 3 (PN3) notification of 2020, investments from countries sharing land borders with India require New Delhi's approval. The increased scrutiny was largely targeted at China to curb opportunistic takeovers and acquisitions of Indian companies due to the covid-19 pandemic.

The commerce ministry has begun discussions with stakeholders to determine whether firms with even a small percentage of Chinese shareholding should be considered as a Chinese company," the people quoted earlier told Mint, speaking on the condition of anonymity. This, in turn, will help determine whether such firms should be allowed to invest without being placed under the restrictions for the purpose of investment approvals, they said.