Government Suggests Relaxing FDI Norms which Restricted Chinese Investment in India

After alteration of the Foreign Direct Investment policy, the government is seeking up to 26% FDI from the foreign countries sharing land border with India, including China. The decision is taken in order to give a green flag to more than 100 pending proposals that have been stuck since the amendments in the FDI policy made back in April 2020.

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Earlier, an inter-ministerial panel was formed to scrutinize all the Chinese foreign investment proposals and to approve only ‘non-controversial’ projects. In the last five years, the total capital inflow from the Chinese investors in the country’s startups has been around $27bn.

Major stakes of various Indian unicorns such as Paytm, Zomato, Hike, Bigbasket, Byju’s are held by the Alibaba and Tencent- the two most prominent Chinese investors. After the FDI policy amendment, E-commerce giant Alibaba Group has decided to re-evaluate its investment portfolio in the country.

Said to be handled by the home secretary with the secretary of DPIIT (Department of Promotion of Industry and Internal Trade) as a member, the panel was the one to suggest the government to ease the policies. The panel is scrutinizing various options and a decision is expected soon. So far, upto 26% FDI cap is being suggested for some sectors.

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