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Even small Chinese FDI proposals to need govt approval, plan to set threshold abandoned: Report

China

Foreign investments with even a whiff of Chinese involvement will need approvals from the Indian government. The Indian government has abandoned its plan to set a threshold for Chinese foreign direct investment (FDI), meaning every proposal will have to be okayed by the government, irrespective of size or percentage stake, reported Times of India. Chinese FDI in Indian companies has attracted considerable attention in recent months. At the beginning of the COVID-19 pandemic in April, the government amended its FDI policies to introduce bureaucratic hurdles for companies from countries that share a border with India if they wish to invest in Indian assets. It was amply clear that the target country for this policy was China, for fear that Chinese state-owned companies try to take advantage of the economic meltdown brought on by the pandemic to buy strategic interests in India. However, at the time, the government was reportedly considering setting a threshold limit below which approvals wouldn't be necessary. This threshold was to be decided based on provisions in Companies Act and the Prevention of Money Laundering Act. However, an unnamed official told Times of India that a threshold limit is not being set. Hence, proposals with even a small amount of Chinese investment will have to undergo scrutiny. 'Significant beneficial ownership' approach ditched The proposed threshold limit was to be set in a way to the rules on the basis of the "significant beneficial ownership" principle. In India, the principle has been put in place as part of Companies…

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