Panel to vet all Chinese FDI proposals | Economic Times

New Delhi: India has set up a screening panel to vet all Chinese foreign investment proposals and those considered “non-controversial” could be approved, a senior government official told ET. 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,” said the official cited above. The proposals that are “non-controversial” could be approved after the committee examines proposals from the point of view of ownership and its implications for security, the person said.Prior Nod for Critical Sector InvestmentsFinance minister Nirmala Sitharaman told ET in an interview on Tuesday that there was no ban on Chinese investments. “If there is this feeling that is coming that we have stopped investors from a particular country, no we have not done any of that,” she had said, adding that investments are being regulated but not stopped.FDI from China was $2.4 billion or 0.51% of the total between April 2000 and June 2020.78418033DPIIT notified the new FDI policy on April 18. “An entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route,” it stipulated. This was aimed at “curbing opportunistic takeovers/acquisitions of Indian companies due to the current Covid-19 pandemic.”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.The government will have to determine the security criteria and also look at it from the perspective of data theft, experts said.“Security grounds could also refer to the activities of the company and how it treats data. The government will have to ensure that the data does not go into wrong hands,” said one of them.A Delhi-based expert on investment issues said, “Security is a broad term and it might be difficult to determine it. Will the government go up the entire chain to check for beneficial ownership or look for links with the Chinese government or the military?”