The Indian government has identified 40 sub-sectors, including rare earth magnets and printed circuit boards (PCBs), for expedited clearance of foreign direct investment (FDI) proposals from countries that share land borders with India, according to a PTI report. This move is part of a revised framework aimed at streamlining investment approvals.
Revised Framework for Faster Approvals
Under the updated standard operating procedure (SOP), FDI proposals from countries such as China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan in these specified sectors will now be processed within 60 days. This decision follows a March directive to fast-track FDI approvals in designated manufacturing sectors from these nations.
Ownership and Control Conditions
The government has clarified that majority ownership and control of the investee entity must remain with resident Indian citizens or Indian-owned entities at all times. This condition ensures that strategic control stays within India despite foreign investment.
Broad Categories of Identified Sub-Sectors
The 40 identified sub-sectors fall under six broad categories: capital goods manufacturing; electronic capital goods and electronic components; polysilicon and ingot-wafer production; advanced battery components; rare earth permanent magnets; and rare earth processing. Specific items include insulation items, castings and forgings for power plants, machine tools, display components (LCD and LED panels), camera modules, electronic capacitors, speakers, microphones, lithium-ion batteries, wearables, and rare earth metal and magnet processing facilities.
Detailed Reporting Norms Introduced
The SOP introduces comprehensive reporting requirements for investments involving entities with direct or indirect ownership from land-bordering countries. These reports will be governed under the Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019, and the information will be accessible by the Reserve Bank of India (RBI).
Reporting Responsibilities
The Indian investee company is responsible for submitting required details to the Department for Promotion of Industry and Internal Trade (DPIIT) before receiving foreign capital. Reporting must occur prior to the inward remittance of foreign capital. In cases without such remittances, reporting is required before executing relevant transactions, including issuance or transfer of capital instruments.
Investor Disclosure Requirements
Investors must disclose shareholding patterns, beneficial ownership, organizational structure, promoters, board composition, key managerial personnel, and control rights. The Indian entity must provide incorporation details and disclose existing or proposed shareholding linked to entities from land-bordering countries.
