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India receives $511.5 million FDI under new neighbour policy
Reuters··22 Aug
India received 511.5 million dollars in foreign direct investment under its revised policy governing investments from neighbouring countries, according to government data cited by Reuters. The policy, introduced in 2020 requiring prior government approval for investments from bordering nations, was created to screen inflows following border tensions. Most proposals under this route have come from China-linked entities.
Prism
What It Means For You
- Job seekers and businesses in sectors like electronics and manufacturing may benefit as approved investment from neighbouring countries continues to flow into Indian ventures.
- Entrepreneurs seeking funding from investors based in bordering countries should be aware that prior government approval is mandatory before such deals can close.
- Anyone tracking India-China economic ties gets a concrete data point showing investment links persist despite ongoing border tensions between the two countries.
What's Happening
- India approved 511.5 million dollars in foreign direct investment proposals from neighbouring countries under the government's screening policy.
- The bulk of the approved proposals involved investors linked to China, government data showed, though the total remains a small share of India's overall FDI inflows.
- The government did not disclose the specific companies or sectors that received the bulk of the approved investment.
Why India Screens Investment From Border Nations
- India introduced this approval requirement in April 2020, shortly before border clashes with China in the Galwan Valley that killed 20 Indian soldiers.
- The policy applies to any investor based in a country sharing a land border with India, including China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan and Afghanistan.
- India's overall FDI inflows have run into tens of billions of dollars annually in recent years, making neighbour-route investment a small fraction of the total.
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