India has received 29 foreign direct investment (FDI) proposals worth Rs48.95bn ($511.4m) under a revised framework allowing investors from land-bordering countries to hold non-controlling stakes of up to 10%.
The investments, disclosed by the Ministry of Commerce and Industry, cover a range of sectors including information technology, artificial intelligence, information and communication, manufacturing, pharmaceuticals, data centres and transport services.
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Investors and entities behind the proposals are based in Mauritius, the US, South Korea, Japan, Singapore, Luxembourg and the Cayman Islands.
The framework follows an amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
Under the revised rules, the beneficial ownership test is applied at the level of the individual investor entity rather than triggering a blanket approval requirement.
Investors with non-controlling land-bordering country ownership of up to 10% can now invest through the automatic route, subject to applicable sectoral caps, entry routes and other conditions.
They may proceed with the investment after reporting the relevant details to the government, without seeking further approval.
Previously, any foreign investor with beneficial ownership traced to a land-bordering country needed prior government clearance, regardless of how small that ownership stake was – a rule that had long been flagged by investors as a source of delay and uncertainty.
The ministry said the change is aimed at cutting transaction time and improving the ease of doing business by removing the prior-approval requirement for non-controlling land-bordering country ownership of up to 10%.
The Indian government is also reportedly considering raising the threshold above which FDI proposals require clearance from the Cabinet Committee on Economic Affairs (CCEA), from Rs50bn to Rs150bn.
This proposal is expected to come up for cabinet approval in due course.
Under the existing framework, in place since November 2015, FDI proposals above Rs50bn require CCEA clearance, while those below the threshold are cleared by the relevant ministry.
