No Change in Chinese FDI Scrutiny, Says DPIIT

In a clarification made recently, Rajesh Kumar Singh, Secretary of DPIIT, has clarified rumours of a policy change regarding FDI from China into India. Singh dismissed the idea that there is a policy change and reiterated that the government’s position has not shifted. He reiterated that Chinese investments are not banned but go through a strict case-by-case review and not a blanket ban.

Singh also pointed out that while India has not banned FDI from China, it has put more scrutiny on all Chinese FDI proposals to protect its national security. He made it clear that the current measures under Press Note 3 that came into force in April this year will remain in force. This note calls for enhanced scrutiny of the investments that originate from neighbors with which India has a physical border to avoid hostile acquisition of Indian firms.

Singh has estimated that 30-40% of the applications from countries with a land border with India have been processed in the last two years, and most of them have been from China or Hong Kong. This clears doubts about the total prohibition of Chinese investments. Singh’s comments are in the backdrop of talks to raise FDI from China to support domestic manufacturing and correct trade deficits, as proposed in the Economic Survey 2023-24.