Govt Mandates 60-Day FDI Approval for China-Linked Projects Across 40 Sub-Sectors

The Centre has identified 40 manufacturing sub-sectors where Foreign Direct Investment (FDI) proposals from countries sharing land borders with India will be processed within 60 days, as per the PTI reports.  

Revised SOP for Bordering Nations 

The revised framework has been issued through an updated standard operating procedure (SOP) by the Department for Promotion of Industry and Internal Trade (DPIIT). 

The countries covered under the rules include China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar and Afghanistan.  

This follows the government’s decision announced in March to speed up the processing of proposals in selected manufacturing activities. 

Rare Earths, Electronics Among Key Areas 

The identified sub-sectors fall under 6 broad segments, including capital goods manufacturing, electronic capital goods and components, advanced battery components, polysilicon and wafers, rare earth processing, and rare earth permanent magnets. 

Printed circuit boards and rare earth magnets are among the sectors included for faster clearances. Other activities listed in the framework include machine tools, camera modules, insulation products, electronic capacitors, wearables, and Li-ion batteries. 

Display components such as LCD, LED, and polymer displays have also been included. The list further covers speakers and microphones used in information and communication technology products. 

Conditions on Ownership and Control 

According to the SOP, majority ownership and control of the investee company must remain with resident Indian citizens or Indian-owned and controlled entities at all times. 

The government has also laid down reporting requirements for investments involving direct or indirect ownership from entities based in countries sharing land borders with India. 

The reporting process will be governed under the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019. Information submitted under the framework will be accessible to the Reserve Bank of India. 

Disclosure Requirements for Investors 

Under the revised rules, the Indian investee company will be responsible for filing disclosures with DPIIT before inward remittance of foreign capital. 

In cases where transactions do not involve foreign capital inflow, reporting must be completed before the issuance or transfer of capital instruments. 

Investors will have to disclose details related to shareholding patterns, beneficial ownership, organisational structure, promoters, board composition, key managerial personnel and control rights.  

Indian investee entities must also provide incorporation details and information on existing or proposed shareholding involving entities from neighbouring countries. 

Read More: Union Cabinet of India Approves ₹23,437 Crore Railway Projects to Boost Capacity! 

Conclusion 

The new guidelines combine quicker clearances for manufacturing-related FDI proposals with mandatory disclosures on ownership, control rights, and shareholding structures. 

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