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.”
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
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.