NEW DELHI: Amid expectations of easing curbs on investment from China, finance minister Nirmala Sitharaman on Wednesday said government will maintain checks on FDI in the “national interest,” given the sensitivity in the region.
“We want business, we want investments, but we also need some safeguards because India is located in a neighbourhood, which is very, very sensitive.I cannot blindly receive FDI because I want money for investment, forgetful or unmindful of where this is coming from,” she said during an interaction at the Wharton School.
Without naming any country, the minister said government often has concerns about the origin of the investment. “Sometimes the ultimate beneficiary is a concern for me, not because of who it is individually, but from where it is, and that is critical for me. So, such restrictions will be in place in the national interest. It’s not just India; many countries have a national security law or regulation through which they control such things.”
The statement came days after India and China announced that they struck a deal to end the four-year-old standoff at the Line of Actual Control in Ladakh, and hours before PM Narendra Modi was to meet Chinese President Xi Jinping.
Soon after the Covid-19 outbreak, government had revised the rules to mandate approvals for all FDIs from countries that share a land border with India, a move that was targeted at China. After tension at the border escalated, several Chinese apps were blocked, and a strict visa regime was followed, which the industry has been complaining about. Sitharaman’s comments indicate that government may not immediately review the regulations despite intense lobbying by companies, as several proposals have not been cleared.
The finance minister also said that India may need around $100 billion FDI annually, compared with last year’s $71 billion (including reinvested earnings).
“Policy-wise, we have already opened the FDI windows. I won’t stop at $100 billion; I will go further. There are steps we are taking – compliance is being brought down, requirements for due diligence being stringent are being brought down. It’s not just the central government which has to take measures to reform; many of the regulations will pertain to the states,” she said, adding that reforms need to percolate down to urban local bodies and panchayats.