Mon. Jan 24th, 2022

India has laid curbs amid a bloody border battle with China and also to avoid risks of opportunistic takeovers.

By Bloomberg

India is considering facilitating the investigation into certain foreign direct investment, according to people familiar with the matter, after rules aimed primarily at China created a bottleneck for inflows.

Currently, Prime Minister Narendra Modi’s government is examining all investment proposals from companies that are either based in countries that share a land border with India or have an investor from one of these nations. It is now considering releasing proposals where the so-called beneficial ownership is less than 10%, meaning that the investor may be from a neighboring country but hold only a small stake in the firm proposing the investment.

The move is being considered after proposals worth $ 6 billion got stuck amid the red tape, the people added, asking not to be identified during discussion of private deliberations. The proposal can be approved as early as next month.

The government has imposed restrictions on such investments amid a bloody border dispute with China and has also averted risks of opportunistic takeovers. The move slowed the approval process with proposals from neighboring countries, including China and Hong Kong, piling up.

An e-mail and text message sent to the spokesperson of the Ministry of Trade and Industry remain unanswered.

In addition to delays, the restriction also made transactions difficult for investors. By relaxing the rules, the pool of investors who can exploit capital-hungry Indian firms will broaden as local firms increasingly turn to large global investors to finance their growth.

As of November 2021, more than 100 proposals are awaiting government approval, with about a quarter of them exceeding $ 10 million each.

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