Govt sets up panel to screen all Chinese foreign investment proposals

  • India has set up a screening panel to vet all Chinese foreign investment proposals and those considered “non-controversial” could be approved.
  • More than 100 proposals involving foreign direct investment (FDI) from China are pending.
  • Prior government clearance was made mandatory for FDI from countries sharing a land border in April. 
  • This was widely seen to be directed at curbing Chinese takeovers of companies amid stock market volatility in the wake of the Covid-19 pandemic.
  • This scrutiny intensified following tension on the border.
  • The screening panel is headed by the home secretary and has the Department for Promotion of Industry and Internal Trade (DPIIT) secretary as a member.
  • An inter-ministerial committee has been set up to look at the proposals that various ministries had received that were forwarded to the home ministry for security clearance.
  • FDI from China was $2.4 billion or 0.51% of the total between April 2000 and June 2020.
  • Prior government approval or clearance by the ministry of home affairs is required for investments in critical sectors including defence, satellites, mining, civil aviation, media, private security agencies and telecommunication.