DPIIT Secy : India to consider Chinese FDI only on case-to-case basis
NEW DELHI : Rajesh Kumar Singh, Secretary, Department for Promotion of Industry and Internal Trade downplayed speculation about a shift in India’s foreign direct investment policy towards China as much ado about nothing. Singh said that the government’s stance remains unchanged, with Chinese investments still required to go through all checks and considered only on a case-to-case basis.
In an interview, Singh, Secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), clarified that India had never blocked FDI proposals from China but only subjected them to increased scrutiny.
“We are not looking to make any changes to Press Note 3. Case-by-case scrutiny will continue so there is no shift in policy stance. Of the total applications that came in from land border countries, I think 30-40 percent have been cleared over the last two years or so. And most of it would be from China or Hong Kong. Others are not net investors like Pakistan, Bangladesh or Nepal. So, it is not that there was ever a complete blockade,” Singh said.
Press Note 3, which came into force on April 22, 2020, intensified checks on an entity of a country sharing a land border with India in order to curb opportunistic takeovers or acquisitions of Indian companies. Singh’s comment on this matter comes amid heightened expectations that India may be more open to FDI from Beijing to boost local manufacturing capacities. The debate was sparked by a suggestion from chief economic advisor Anantha Nageswaran’s Economic Survey 2023-24 that pitched for more Chinese investments to keep a lid on New Delhi’s ballooning trade gap.
he Centre’s move to set up an online portal to expedite e-visas for Chinese technicians facilitating easier entry for them into India further added fuel to these speculations.
The secretary clarified that the Economic Survey’s suggestion should be looked at as an academic exercise. “It is just sharing an idea; it is a balloon that has been floated,” he said during the interaction.
Can we safely assume that India will consider any FDI investments from China only on a case-to-case basis and that will not require changes to Press Note 3?
There is no change in policy on China and we are not looking to make any changes to Press Note 3. Case-by-case scrutiny will continue, so there is no shift in policy stance. Of the total applications that came in from land border countries, I think 30-40 percent have been cleared over the last two years or so. And most of it would be from China or Hong Kong. Others are not net investors like Pakistan, Bangladesh or Nepal. So, it is not that there was ever a complete blockade. There is no change in policy, case-by-case (scrutiny and clearance) will continue. The Economic Survey is just sharing an idea, it is a balloon that has been floated, it is more of an academic exercise.
Would this mean we will not be keen on FDI from China on sectors that they dominate, especially in exports such as electric vehicles?
In case-to-case examinations, all such aspects can be looked at as it gives us the freedom to look at every factor.
You have spoken about how India is mulling reforms in FDI as the government is targeting close to $100 billion in inflows over the next five years. Given that we have opened up many sectors already, what more can be done?
We already have one of the most liberal FDI regimes in the world. About specific sectors, what we are discussing, it is too preliminary to share at this point. As of now, internal, preliminary discussions are on, when it becomes a policy, it will be announced. The overall economic policy is to make the India story more compelling for the world.
Do you feel India’s domestic industry needs to be more open to a lower-tariff regime in the long run as the country looks at signing more foreign trade agreements (FTAs)? And how can India Inc better prepare for it and for which sectors?
In general, over time, we have to stand on our own feet and become more competitive. Therefore, they should prepare for a more sort of low-tariff regime than they may have been prepared for in the past. It is a general statement, which is not linked to any sectors. The government is not bound by industry’s insecurities or worries about lower tariffs affecting their protected markets. That’s not our job. Our job is to see what is good for the country in terms of the trade-offs (and that) is what is recommended as a policy. Industry resistance is a factor, but it is not the only factor that will decide how tariffs are negotiated vis-a-vis FTA negotiations. In any FTA negotiation, there will be trade-offs and some of those may lead to lower tariffs in some sectors subject to us getting market access or even access to services of manpower exports. Industry is just one element in all of this.
A review of the flagship production-linked incentive (PLI) scheme to make the gains more broad-based has been on the cards. Could you share more details on the tweaks and the rationale behind it?
The empowered committee of secretaries reviews the PLI scheme every quarter anyway. Those sectors where there is a lag, where disbursements have not started, or there is undersubscription—those will be reviewed.
Is the government planning for new PLI schemes for any sectors?
I am not aware of any new PLI scheme right now, the focus is only on implementing the current ones well and that PLIs in textiles, steel pick up.
Back in April you mentioned that the government is in the final stages of creating a dedicated policy for deep-tech startups and will look to set up a dedicated fund of funds that would invest in alternative investment funds (AIFs) that would, in turn, pump funds into deep-tech startups. Is there a timeline to finalise this policy?
The deep-tech policy will be a general policy. It won’t talk about specific schemes. After the policy is finalised, there could be specific schemes not only by DPIIT but any other department based on that umbrella policy. Policy is one, certain types of interventions, certain types of definitions of deep-tech will be spelt out in the policy. That scheme is in the final stages, let it get cabinet approval. I cannot give a specific timeline on it.