About 40-50 foreign direct investment (FDI)proposals from countries sharing land border with India under the provisions of Press Note 3 are pending for approval with the government, official sources said.
Under Press Note 3, the government has made its prior approval mandatory for foreign investments from countries that share land border with India. These countries are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
As per that decision, FDI proposals from these countries need government approval for investments in India in any sector. "About 40-50 proposals are pending with the commerce and industry ministry as they require security and political clearances," one of the sources said.
Sources added that there is no consideration at present to ease norms under this press note. "FDI is not totally banned from these countries. It is just that they (investors from these countries) have to follow the government approval route and of course that takes times," a source said.
The government has a commitment to clear these proposals in three months time, but it takes about seven months. As per industry sources, MG Motor, a British brand owned by China's largest automaker SAIC Motor Corp, has been awaiting government approval for around two years now to raise funds from its parent.
MG Motor India recently said it plans to offer a majority stake to local partners and investors over the next 2-4 years as it looks to raise around Rs 5,000 crore capital to fund next round of its growth in the country. The automaker has been looking to raise capital for sometime now to fund its expansion.
With little success so far, it has now started looking for other options to raise the required capital. Total FDI flows into India, which include equity inflows, reinvested earnings and other capital, declined 16 per cent to USD 70.97 billion in last fiscal year as against USD 84.83 billion in 2021-22 due to lower inflows in important sectors such as automobiles, computer hardware and software.
Press Note 3 was introduced in April 2020 as the government wanted to curb opportunistic takeovers of domestic firms following the COVID-19 pandemic. An inter-ministerial committee has been formed by the government to scrutinise these proposals.
All administrative ministries and departments have been advised to have dedicated FDI cells to process these proposals expeditiously. India received USD 2.5 billion FDI equity from China during period April 2000 to March 2023.
During the period, India received USD 0.076 million investments from Bangladesh, USD 3.31 million from Nepal, USD 9 million from Myanmar and USD 2.57 million from Afghanistan.
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