No Change In FDI Policy For Countries That Share Borders With India, Says Government

New Delhi, June 4: The government has announced that it has made no change in the existing foreign direct investment (FDI) policy for countries that share land borders with India.

The existing FDI policy was introduced by the government through Press Note 3 in 2020. It mandates that investors from bordering countries such as China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan must seek approval from the Indian government before making any sector investment in India.

This follows recent speculation that the Indian government is considering changes to its FDI policy for investments from China. However, Indian government officials have dismissed these reports, reaffirming that no preferential or revised framework has been introduced for any specific country.

What Did The Government Say?

The Indian government clarified that the Press Note 3 still applies uniformly to seven countries: China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan. Following the announcement, it is now clear that all investment proposals from these nations are subject to the same level of scrutiny and evaluation, in line with the standard operating procedures established for such cases.

“There has been no amendment to the FDI policy relating to investments from countries sharing land borders with India after the issuance of this press note,” one official source confirmed.

Why The Review Process Under Press Note 3?

FDI proposals under Press Note 3 are evaluated by an inter-ministerial committee led by the Union Home Secretary. This panel follows a structured process and evaluates all investment proposals from the bordering countries to ensure national security considerations and economic implications.

What About FDI From Other Countries?

While FDI from land border countries requires government nod, the government clarified that the majority of India’s FDI inflows continue under the automatic route, which does not require prior approval. This means that countries apart from those included in Press Note 3 are free to invest in India without seeking any prior approval from the Indian government.

What’s Ahead For India Regarding FDI? 

The decision taken by the Indian government is after due consideration to ensure evaluation of investments from sensitive regions, especially Pakistan and China. With the recent tensions with Pakistan and China’s longstanding support to the country, India has prioritised national security over investments.

Going forward, it is expected that the Indian government will remain cautious on strategic investments from sensitive regions, while maintaining an open and regulated investment environment for global players.

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