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New FDI norms raise questions over inflows from Taiwan: Report

The confusion is over whether under the rules, investments from Taiwan will be treated at par with those from China.

April 30, 2020 / 01:55 PM IST

The changed foreign direct investment (FDI) norms, which mandate government approval for investors from neighbouring countries, have raised questions over inflows from Taiwan.

India, as a member of the World Trade Organisation (WTO), does not recognise Taiwan as an independent country and accepts Chinese sovereignty over the region.

The confusion is whether under the new FDI rules, investments from Taiwan would be treated at par with those from China, the Economic Times reports.

The new rule applies to countries sharing land borders with India. And while the special administrative regions such as Hong Kong, Macau and Taiwan do not share land borders with India, they are recognised as part of China.

As Moin Ladha, partner at Khaitan & Co told ET, “Given Taiwan’s unique political position, one cannot completely rule out concerns around the possibility of the restrictions being applicable to it as well.”

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Hong Kong-based British HSBC Bank has also reportedly sought legal counsel on how India’s new FDI adjustments would impact Taiwan, while other MNC banks, too, have approached the Reserve Bank of India for clarification, the report said.

HSBC did not respond to queries as per the report.

A press note clarifying the government’s position on the issue is expected soon, Anshuman Mozumdar, partner, L&L Partners – Mumbai, told the newspaper. He acknowledged that “China’s control and influence in such regions though they do not share land borders with India” means they could be included in the new rule.

Another cause for confusion is that Taiwan has a tax treaty with India and the industry lobbies have sought clarifications from the government.

While Taiwan’s investments have mostly been in infrastructure and energy space, many are also seeking information on whether Chinese investment in technology and ecommerce would be allowed any leeway, a source told ET.
Moneycontrol News
first published: Apr 30, 2020 01:55 pm

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