India to fast-track investments with minority Chinese stakes, says official

By Shivangi Acharya and Manoj Kumar

NEW DELHI, March 11 (Reuters) - India will offer faster approvals for investments involving minority Chinese stakes across a wider range of sectors, a government official said on Wednesday, marking a significant shift after six years of curbs following a 2020 border clash.

New Delhi has eased investment rules to support domestic manufacturing and attract foreign capital, particularly for proposals involving small Chinese shareholdings, India's industry secretary Amardeep Singh Bhatia told reporters.

Under the new framework, New Delhi on Tuesday scrapped the blanket government approval requirement for firms with up to 10% Chinese ownership, and said investments in sectors such as electronics, batteries, rare-earth magnets and processing will be cleared within 60 days, provided Indian residents retain majority control.

An inter-ministerial panel headed by the cabinet secretary will scrutinise Chinese investment proposals and may revise the list of sectors eligible for faster clearance, Bhatia said.

Prime Minister Narendra Modi's government had tightened investment rules to reduce India's dependence on China after the deadly border clash with China in 2020.

However, the curbs starved Indian manufacturers of capital and technology, and forced the shelving of a 2023 plan by China's BYD 002594.SZ to invest $1 billion in an electric car joint venture.

"We hope this will help set up more manufacturing facilities in India," Bhatia said, adding that the rules have been eased after consultation with investors such as BlackRock and several domestic manufacturers.

SECURITY SCRUTINY

Industry experts say the move could revive delayed funding rounds, joint ventures and investment proposals that have been stuck under the stricter regime.

A clearer and time-bound approval process could significantly accelerate project implementation, analysts said.

Failure of the production-linked incentive schemes to backfill critical technology and components at scale in key sectors prompted industry to demand relief.

Bhatia said that while investment rules are being eased, security concerns related to Chinese investments remain and proposals will continue to undergo scrutiny.

"There will be an expedited process and some steps are being done away with. But broadly as far as the security clearances are required, that process will remain," Bhatia added.