No Chinese company has been given the green signal to invest in India and no proposal has been accepted either, government sources said today, denying a report that said scores of investment proposals from China were set to be cleared after easing of border tensions.
Only three proposals of companies based in Hong Kong were cleared in a meeting held on January 22, the sources said. These proposals were by Citizen watches, Nippon paints and Netplay. Of the three, two are Japanese and one belongs to an NRI, sources pointed out.
As the border row escalated in June with the physical clash in eastern Ladakh’s Galwan Valley, in which 20 soldiers died for the country, the government made changes to the Foreign Direct Investment (FDI) policy in a clear message to Beijing.
“The government of India has put in place a robust FDI policy. The amended policy says proposals from countries sharing borders with India have to go through security analysis and only after a thorough analysis can permission be given,” said the sources, adding that the decision on security assessment was the Home Ministry’s.
“Whatever proposals are in the pipeline have to go through a strict scrutiny on the stake of the Chinese government, if any, and the security implications. Only then can they be given the go-ahead,” government sources asserted.
Yesterday, news agency Reuters had reported, quoting government and industry sources, that 45 investment proposals from China were about to be cleared, likely including those from Great Wall Motor and SAIC Motor Corp.
The news agency quoted two government sources that it said had seen the list; the report said most of the 45 proposals set for early approvals were in the manufacturing sector, considered non-sensitive in terms of national security. The proposals had been held up since last year after the government tightened controls on Chinese investment in the country amid border tensions, said the report.
According to Reuters, the “change” in the government’s stance followed an “improvement in the border situation”.
Both sides have been pulling back troops, tanks and other equipment from flashpoints in the prolonged conflict.
The report also said about 150 investment proposals from China worth more than $2 billion were stuck in the pipeline. Companies from Japan and the US routing investment through Hong Kong were also caught in the cross-fire as an inter-ministerial panel led by the Home Ministry increased scrutiny of such proposals, Reuters said.
Great Wall and General Motors (GM) made a joint proposal last year seeking consent for the Chinese automaker to purchase the US company’s car plant in India, in a deal expected to be valued at around $250-$300 million. SAIC, which started selling cars in India in 2019 under its British brand MG Motor, has invested around $400 million of the nearly $650 million it has committed to India and would need approval to bring more investment.