Cabinet eases investment rules for China, neighbours

Six years after India restricted investments from companies based in China and other countries that share a land border with it in local entities, the Union cabinet on Tuesday allowed the same conditionally, to boost specific sectors (such as electronic components and capital goods manufacturing) and attract more foreign direct investment in startups, especially in emerging deep tech areas.

- Rajeev Jayaswal

"The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved change in guidelines on investments from countries sharing land border with India (LBCs)," said a government statement issued after the cabinet meeting.

The changes are measured and calibrated as detailed by the statement: the investments cannot exceed 10% beneficial ownership, but will be allowed automatically, albeit with applicable sectoral caps and other rules; and the investee entity has to report relevant information to DPIIT. DPIIT or the department for promotion of industry and internal trade (DPIIT) is an arm of commerce and industry ministry.

The new policy provides for time-bound expedited clearance -- within 60 days -- of investments in specific sectors, manufacturing of capital goods, electronic components, and polysilicon and ingot-wafers.