Government of India sets 60-day FDI clearance for 40 sub-sectors from land-bordering nations

Key facts

• The Government of India has established a 60-day timeline to process and decide Foreign Direct Investment (FDI) proposals from countries sharing land borders, including China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan.
• The expedited clearance applies to 40 sub-sectors under six broad categories: capital goods manufacturing, electronic capital goods and electronic component manufacturing, polysilicon wafers, advanced battery components, rare earth permanent magnets, and rare earth processing.
• Specific sub-sectors identified for fast-track approval include insulation items, castings and forgings for power plants, machine tools, display components (plasma, polymer, LCD, LED), camera modules, electronic capacitors, speakers and microphones for ICT products, Li-ion batteries, wearables, and rare earth metal facilities.
• A mandatory condition for these proposals is that the majority shareholding and control of the investee entity must remain with resident Indian citizens or Indian-owned and controlled entities at all times.
• The Department for Promotion of Industry and Internal Trade (DPIIT) mandated that Indian investee firms must report investment details prior to inward remittance under the Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019, for access by the Reserve Bank of India (RBI).