Nearly 50 Investment Proposals From Chinese Firms Placed Under Security Review Scanner
Chinese companies’ existing and planned investments in India by end March 20 stood at more than $26 billion, as per Brookings Research Group.
Due to alarming Security reasons new rules were made urgently in April this year. Under these new rules, all investments by entities based in neighbouring countries need to be approved by the Indian government, whether for new or additional funding. China is the biggest of these investors and the rules. Naturally the new rules drew criticism from Chinese investors and Beijing, which called the policy discriminatory. They chose to ignore the fact that maximum security threats arose from their investments onlyt. In any case, investments in India will be decided by India Only and cannot be imposed or thrust upon by Others.
After the Galwan intrusion across the LAC and attack on Indian Army killing 20 indian soldiers by the Chinese PLA, the worst fears have come true. The Indian government is Thus reviewing around 50 investment proposals involving Chinese companies under the new screening policy.
The new investment rules were aimed at curbing opportunistic takeovers during the coronavirus outbreak. However, a deterioration in bilateral relations since the Galwan skirmish could further delay approvals.
“Various clearances are required. We are being a bit more cautious as one would imagine,” said a senior Indian government official in New Delhi, when asked about the impact on investment applications since the border clash.
India’s industries department under the commerce ministry, which drafted the new policy, did not respond to a request for comment.
The official, said about 40-50 applications involving funding from a Chinese investor have been filed since the rule change and are currently under review.
Indian government agencies, including the Indian consulates in China, have been communicating with investors and their representatives to seek clarifications on the proposals.
Alok Sonker, a partner at Indian law firm Krishnamurthy & Co, said at least 10 Chinese clients had sought his advice in recent weeks for investing in India, but were waiting for more clarity on the policy outlook in India.
After the Galwan attack business cannot be as usual.l
Last week India banned 59, mostly Chinese, mobile apps including Bytedance’s TikTok and Tencent’s WeChat, in its strongest move yet targeting China in the online space since the border crisis erupted last month. The move has potentially dented big Chinese businesses’ expansion plans for the South Asian market.