NITI Aayog, India’s top policy think tank, proposed easing rules that urge extra scrutiny for investments by Chinese companies, government sources said.
NITI Aayog, standing for National Institution for Transforming India, argued that the rules delay big deals, Reuters reported, citing government sources.
NITI Aayog Recommends allowing Chinese Companies To Acquire Up To A 24 Percent Stake
The proposal recommends allowing Chinese companies to acquire up to a 24 per cent stake in Indian company without requiring security clearance, said the sources on condition that names should not be published.
As per a Hindustan Times report, at present, all investments from Chinese entities must be vetted by both the ministry of home affairs and the ministry of external affairs.
It’s Just Recommendations, Yet To Be Finalised
It’s just recommendations and yet to be reviewed by the relevant ministries. NITI Aayog’s all proposals are not always adopted.
These rules were imposed in 2020 after deadly border clashes in Galwan valley, which affects Chinese companies the most.
The suggestions arrived aiming at reviving slowing foreign direct investment (FDI). It came at a time when both neighbouring countries are seeking to normalise the tension.
What Is FDI?
An investment is called Foreign Direct Investment (FDI) if a party from one country invests into a business or corporation in another country. With FDI, foreign companies are directly involved with day-to-day operations in the other country. In India, FDI flows through either of the two routes: Automatic route or Government-approval route.
ALSO READ: Nvidia To Resume AI Chip Sales To China, Is This A Turning Point In US-China Tech Trade?
