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A leading Indian government source involved in policy making said New Delhi will attempt to approve any investment proposal in a non-sensitive sector within 15 days when the stake being purchased is not significant.
- Reuters
- Last update: April 25, 2020, 11:29 p.m. IST
India plans to speed up the review of some investment proposals from neighboring countries like China due to concerns that the new evaluation rules could affect the plans of companies and investors, three sources told Reuters on Saturday.
To avoid opportunistic acquisitions during the coronavirus outbreak, India said this week that any foreign direct investment from countries that share a land border would require prior authorization from the government, meaning they cannot go through the so-called automatic route.
Advisers to Chinese companies have said they are concerned that the process could take several weeks and reach investment agreements and deadlines. Automotive firms such as SAIC’s MG Motor and Great Wall, and investors Alibaba and Tencent have made big bets in India.
The Chinese embassy in New Delhi called the new screening policy discriminatory.
A senior Indian government source who is involved in policy making told Reuters New Delhi will try to approve any investment proposal in a non-sensitive sector within 15 days when the stake being purchased is not significant.
The official declined to give details on which sectors would be considered sensitive and what investment threshold would be considered significant.
“We will try to accelerate investment proposals as soon as possible. It may be faster for some (sectors) and in others we could take a while,” said the official, who declined to be named due to the sensitivity of the discussions.
Two other sources familiar with the government’s thinking confirmed that a fast-track mechanism was being considered, with possible approval deadlines of seven days to four weeks.
The Indian Ministry of Commerce and Industry did not immediately respond to a request for comment.
‘China is concerned’
While the fast-track mechanism would be open to all of India’s neighbors with a land border, China would be the main beneficiary. Unlike Pakistan, Bangladesh, Myanmar, Nepal, and Bhutan, it has significant existing and planned investments in India, which the Brookings research group estimated at $ 26 billion.
Dipti Lavya Swain, a partner at the Indian law firm HSA Advocates that advises Chinese companies, said sectors such as telecommunications, financial services and insurance are likely to be considered more sensitive than others, such as cars and renewable energy.
“Approvals should be an ongoing process and anything between two to four weeks could be bearable,” said Swain. “Sectors that are already in serious financial difficulties and are not concerned with national security should also receive faster approvals.”
India’s new screening rules are designed to prevent sales of corporate assets during the coronavirus outbreak, but government sources have said they will apply to new investments as well as Hong Kong investments as well.
In response to Reuters questions this week, China’s Foreign Ministry said it hoped for a better business environment as India had set more barriers for some investors.
“China is concerned. In the face of the economic downturn caused by the epidemic, countries should unite to overcome difficulties,” it said in a statement on April 22.
