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FDI from China contracted by 64% between FY16 and FY20: Finance MoS in Lok Sabha

China

Between April 2015 and March 2020, China invested US$354.93 million (~₹2609.71 crore) in Indian telecommunications, electronics, information and broadcasting, electrical equipment, and computer software and hardware. Of this amount, 91% was invested in the sectors of electrical equipment and electronics and a mere 0.5% ($1.74 million) in telecommunications, Anurag Thakur, the Minister of State for Finance, submitted in a written reply in the Lok Sabha on September 14.

Total FDI (foreign direct investment) from China has contracted by 64.5% between FY16 and FY20. In FY16, Chinese FDI in India totalled $461.4 million and $277.25 million in FY 17 while in FY20, it contracted to $163.78 million. Despite this decrease, Chinese investment in the electronics sector catapulted from $2.26 million in FY16 to $54.02 million in FY20.

Investments from India to China, on the other hand, are a fraction of Chinese FDI in India. Indian companies invested $49.19 million in China in 2017, $12.61 million in 2018 and $20.63 million in 2020.

The question, raised by DMK MP S. Jagathrakshakan and KMDK MP A.K.P. Chinraj, had asked for the number of Chinese companies that have invested in India in the last three years and the number of Indian companies that received such investment. The Ministry of Finance did not answer either of these questions and instead provided a sector-wise break up Chinese FDI into 48 Indian sectors over the last five years.

In April 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) issued Press Note 3 to revise India’s FDI Policy. Through this revision, none of India’s neighbours that share a land border with the country, including China, can invest in India directly. All such investments have to be approved by the Indian government. This covers investments from companies that are located within the land neighbours, and investments to entities whose beneficial owner is located in or is a citizen of these nations.

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