Quick nod likely for China investments 

#GS3 #Economy  

Govt. approval for proposals in non-sensitive sectors likely in 15 days if stake sought is not significant 

  • The Centre plans to fast track the review of some investment proposals from neighbouring countries such as China following concerns new screening rules could hit plans of companies and investors.  
  • To avoid opportunistic takeovers during the coronavirus outbreak, India said this past week that all foreign direct investment from countries sharing a land border would require prior government clearance, meaning they can’t go through a so-called automatic route.  
  • Advisers to Chinese firms have said they are concerned the process could take several weeks and hit deals and investment timelines. Auto firms such as SAIC’s MG Motor and Great Wall, and investors Alibaba and Tencent have placed major bets on India. The Chinese Embassy in New Delhi has called the new screening policy discriminatory.  
  • New Delhi will try to approve any investment proposal in a non-sensitive sector within 15 days when the stake being bought is not significant.  
  • The official declined to elaborate on which sectors would be considered sensitive and what threshold of investment would be deemed significant.   

 ‘$26 bn in investments’  

  • While the fast track mechanism would be open to all India’s neighbours with a land border, China would be the main beneficiary.   
  • It has major existing and planned investments in India, which the Brookings research group estimated at $26 billion.   
  • The sectors such as telecom, financial services and insurance were likely to be deemed more sensitive than others such as automobiles and renewable energy.  
  • The new screening rules are designed to prevent fire sales of corporate assets during the COVID-19 outbreak but government said that they will also apply to greenfield investments, as well as investments from Hong Kong.  
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