After imposing a ban on 59 Chinese mobile applications, the Indian government is reportedly reviewing around 50 investment proposals involving Chinese companies under a new screening policy.
The development was first reported by Reuters citing sources close to the matter.
Earlier in April, the New Delhi government had tweaked its Foreign Direct Investment policy, making it mandatory for investments from neighbouring countries that share a land border with India, to get government approval first.
Under new rules, all investments by entities based in neighboring countries need to be approved by the Indian government, whether for new or additional funding. China being the biggest investor, criticized the policy and Beijing called it policy discriminatory. China even went on to call the policy change a violation of the World Trade Agreement.
Although the new investment rules were aimed at curbing opportunistic takeovers during the coronavirus outbreak, experts believe that it was a significant gesture made to the Xi Jinping government. Industry executives say a deterioration in bilateral relations due to constant border clashes between the armies of the two countries is the main reason for such drastic measures from the Indian side.
Recently, the armies of the two nations involved in a deadly clash along the border in Ladakh region’s Galwan Valley. While 20 Indian soldiers were martyred in the clash including Commanding Officer, China has maintained a silence on the number of casualties on its side.
The Galwan Valley encounter has further hampered the trade relation between the countries. Both the countries have held up import consignments at their ports and are delaying the delivery causing trouble for the businesses operating in the respective countries. This could further delay approvals from the government.
“Various clearances are required. We are being a bit more cautious as one would imagine,” said a senior Indian government official in New Delhi, when asked about the impact on investment applications since the border clash.
India’s industries department under the commerce ministry, which drafted the new policy, did not respond to a request for comment. The sources declined to name the companies whose investments are pending approvals, due to confidentiality concerns.
The official, and two other sources, said about 40-50 applications involving funding from Chinese investors have been filed since the rule change and are currently under review.
One of the sources said that multiple Indian government agencies, including the Indian consulates in China, have been communicating with investors and their representatives to seek clarifications on the proposals.
Last week India banned 59, mostly Chinese, mobile apps including Bytedance’s TikTok and Tencent’s (0700.HK) WeChat, in its strongest move yet targeting China in the online space since the border crisis erupted last month. The move has potentially dented big Chinese businesses’ expansion plans for the South Asian market.
Chinese companies’ existing and planned investments in India stand at more than $26 billion, research group Brookings said in March.
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