New Delhi: In line with the recommendation of a high level government panel, the Department for Promotion of Industry and Internal Trade (DPIIT) has started inter-ministerial consultations to bring in a slew of reforms to boost investments, including withdrawing the current restrictions on Foreign Direct Investment (FDI) from countries including China that share land border with India, ThePrint has learnt.
India amended its FDI policy in April 2020, making prior government approval mandatory for foreign investment in any sector from countries sharing land borders—China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan. These restrictions were brought in to “curb opportunistic takeovers/acquisitions of Indian companies due to the Covid-19 pandemic”.
While the move was mainly targeted at China, India’s thawing ties with Beijing have prompted a rethink on the curbs.
“Interministerial consultation with stakeholder ministries are on,” a senior government official, who did not want to be named, told ThePrint.
“The recommendations were given to the concerned line ministries for follow-up action and they have started working on it,” the official added.
Separately, DPIIT has readied a draft cabinet note to issue a clarification allowing small e-commerce exporters to use online platforms to export to global markets.
Currently, there is no clarity on whether FDI-funded e-commerce platforms with global reach can sell products of small e-commerce exporters in international marketplaces.
“There is a lot of ambiguity right now on whether small e-commerce operators are allowed to export to the global market. It was felt that a clarification is required in the FDI policy to make the position clear. DPIIT is considering issuing a clarification in the FDI policy and has readied a draft cabinet note in this regard,” the official said.
The draft cabinet note is ready and inter-ministerial consultations are underway to finalise the policy soon. This recommendation also came from the Gauba committee.
However, there has been no forward movement on the committee’s recommendation to increase the FDI limit under the automatic route from 49% to 74% in the defence sector, in cases where the applicant company already has an industrial licence issued by DPIIT or government approval for FDI in defence.
“The DPIIT has sought comments from the defence ministry on this before suitable amendments are made in the FDI policy. The defence ministry is discussing the proposal as they have some reservations,” the official said.
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