India receives Rs 4,895 crore FDI after easing rules for neighbouring countries

India has received foreign direct investment (FDI) worth Rs 4,895 crore ($511.5 million) through 29 investment proposals under a new policy that makes it easier for investors from countries sharing a land border with India to invest in the country, reported Reuters.

The government said the investments cover sectors such as information technology, artificial intelligence, manufacturing, pharmaceuticals, data centres and transport services.

NEW FDI RULES MAKE INVESTMENT EASIER

The investments come under revised rules introduced in May. These rules allow investors from countries that share a land border with India to invest through the automatic route if their ownership is non-controlling and does not exceed 10%.

The automatic route means investors do not need to seek prior government approval, provided they meet the applicable sectoral limits and other conditions.

China is expected to be the main country covered by the change, given its position as India’s largest neighbouring economy with a land border.

EARLIER, GOVERNMENT APPROVAL WAS REQUIRED

Before the policy change, foreign investors with any beneficial ownership linked to a country sharing a land border with India generally needed prior government approval.

The requirement was introduced in 2020, when India tightened its FDI rules following concerns over investments from neighbouring countries. Even small ownership interests could come under the approval requirement.

The revised framework now provides greater flexibility for investors with limited and non-controlling stakes.

INVESTMENTS COME THROUGH SEVERAL JURISDICTIONS

According to the commerce and industry ministry, the 29 investment proposals have been reported by investors or entities based in jurisdictions including Mauritius, the United States, South Korea, Japan, Singapore, Luxembourg and the Cayman Islands.

The government said the proposals cover a wide range of industries, showing that the new rules are being used across different parts of the economy.

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