The proposals under consideration include making it mandatory for beneficial owners from nations sharing a land border with India to seek the government’s permission to acquire more than 10% stake in any local firm, the people said, asking not to be identified citing rules. The discussions are at a preliminary stage, they said.
Prime Minister Narendra Modi’s administration is formalizing investment rules for neighboring countries amid a bloody border standoff with China earlier this year. That’s led to over 140 proposals worth more than $1.75 billion, including proposals from China and Hong Kong, getting delayed and complicating deal-making for investors.
The framework is expected to speed up the approval process and bring in much-needed clarity for both private equity firms and hedge funds and companies looking for foreign capital as they struggle amid the pandemic-generated economic shocks.
A call made to the trade and industry ministry spokesman was not immediately answered.
With escalating border tensions with China — the worst military crisis since a war in 1962 — India has been taking a series of steps in retaliation by banning Chinese apps, tightening visa rules for Chinese nationals and imposing curbs on companies from nations sharing a land border from bidding for government contracts.
All the investment proposals will be subject to guidelines of home affairs for security clearance and external affairs department for political clearance.