India may ease FDI rules for border nations including China |
In an attempt to boost the Indian Economy, the Government is considering a plan to allow up to 26% foreign direct investment from countries with which it shares a land border, including China and Hong Kong, without government scrutiny in sectors that are on the automatic route. Once approved the decision would expedite more than 100 proposals that are stuck after the FDI policy was amended in April, making government approval mandatory for foreign investment from border nations. A panel of inter-ministerial headed by the home secretary is working on the integrities in this matter. The actual threshold may even be set at the prescribed 25% beneficial ownership limit in the Prevention of Money Laundering Act, which will deny such investors the power to block special resolution powers under the companies law. According to the officials, for government contracts, a threshold of 25% has been prescribed for beneficial ownership. Separate treatment for brownfield and greenfield investments could be spelled out in the proposed framework. Officials further said that a suitable clarification will be issued once the decision is finalised, adding that security clearance will still be required for such investments as is the case for investments in certain sensitive sectors. Some of the proposals stuck over clearances are from American or European companies that have marginal investments from Hong Kong or China-based entities or individuals.
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