Goyal hints at softening of Press Note 3 curbs to boost ties with China firms

Union commerce minister Piyush Goyal

Prime Minister Narendra Modi is looking at everything that will lead to ease of doing business and ease of living, Commerce and Industry Minister Piyush Goyal said while responding to possible changes in 'Press Note 3'.

In an interview with Network 18, Goyal said: "I will allow time to take decision (on Press Note 3 changes). I will not allow to pre-empt what will happen in the future."

Press Note 3 is part of India’s Foreign Direct Investment (FDI) policy, which was brought in April 2020, aimed at warding off any attempt at opportunistic takeover or acquisition of Indian companies.

Under Press Note 3, an entity of a country, sharing land border with India or where the beneficial owner of an investment in India is situated in or is a citizen of any such country, can invest only through the government route.

These amended rules under Press Note 3 came into force from April 22, 2020, increasing scrutiny over FDI from China as well.

Moneycontrol reported on August 18 that India has initiated discussions to identify sectors in which rules pertaining to FDI can be eased, specifically coming from China, potentially paving way for sectoral and country-specific tweaks to Press Note 3.

The discussions have focused on easing FDI rules for renewable energy sectors such as solar, that could benefit from Chinese investments and expertise, while also ensuring stricter scrutiny for areas like information technology and data, according to officials.

“Press Note 3 is under active discussion and is nearing the finalisation stage. Inter-ministerial consultations with the Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Corporate Affairs (MCA) are already underway, and a draft framework is ready. The government is considering changes in certain sectors, particularly solar, and those where the domestic industry has sought relaxations. The focus is to balance investment inflows while safeguarding sensitive areas,” one of the officials told Moneycontrol earlier.

The government is also reviewing FDI norms for sectors like information technology and data-driven services, to ensure that there are no security or strategic risks before opening up further. The discussions are at a nascent stage and any decision hinges on a green signal from the Prime Minister’s office, said sources.