Many business media houses recently ran a report stating that proposal to permit Chinese FDI (Foreign Direct Investment) in Bharat had been cleared by the Central government. But as it often happens, it has now come to light that these reports were misleading and the Commerce Ministry has issued a clarification that there has been no change in policy on Chinese FDI post disengagement.
What media houses said
Several media houses stated that Reuters had quoted a government ‘source’ as saying that the central government has approved investments from Chinese companies in what is believed to non-sensitive sectors and that these would be approved faster while a call would be taken on allowing Chinese investments in sensitive sectors would be taken later after having reviewed the same.
As per a Business World report:
“India is set to clear 45 investment proposals from China, which are likely to include those from Great Wall Motor and SAIC Motor Corp, government and industry sources told Reuters, as military tensions between the two countries ease at the disputed border.
The proposals have been held up since last year after India tightened controls on Chinese investment in the country in retaliation against alleged Chinese troop incursions in the western Himalayan region. China blamed Indian troops for the standoff.
About 150 investment proposals from China worth more than $2 billion were stuck in the pipeline. Companies from Japan and the U.S. routing investment through Hong Kong were also caught in the cross-fire as an inter-ministerial panel led by the interior ministry increased scrutiny of such proposals.
…Two government sources who have seen the list said most of the 45 proposals set for early approvals are in the manufacturing sector, which is considered non-sensitive in terms of national security.
…The plan going forward is to split up over 150 proposed Chinese investments into three categories depending on the risk to national security, the sources said. Sectors such as automobiles, electronics, chemicals, and textiles are seen as non-sensitive whereas those involving data and finance are deemed sensitive, consultants and lawyers have said.
Proposals from non-sensitive sectors will be approved faster, while those seen as “sensitive” will be reviewed later, one of the government sources said.”
It must be mentioned here that the Reuters report repeatedly quotes ‘sources’ who conveniently turn down their request to confirm the approvals given by the ministry which indicates that the report is most probably intended to mislead as it often happens with media reports based on ‘sources’.
Commerce Ministry discards media reports
Commerce Ministry stated that media reports indicating the government granting permission to Chinese FDI in Bharat post the military de-escalation announcement by Defence Minister Rajnath Singh on 11 February are misleading. It also said that three FDI proposals to companies from Hong Kong have been cleared none of which are Chinese.
The Mint report says:
“Government sources told ANI that there is no change or easing in FDIs from China as of now and nor it is planned in near future. All investments from China have to follow the procedures and government clearance route, nod will only be given to those investments that bear no implications on Indian security interests. Any Chinese company that potentially impinges on India’s security will not be cleared.”
As per the government, the three proposals which have been approved are those given to companies based in Hong Kong, one of which is of Japanese origin, and that all of them have security clearance. Further, it has come to light that these clearances aren’t linked to the disengagement process as indicated by media reports as they were cleared by the ministry on February 5 post the ministry meeting on 22 January.
The three companies given clearance are Nippon Paint Holdings Co. Ltd, Japan (Nippon Japan). Nippon Japan is listed on the Tokyo stock exchange, Citizen Watches (India) Private Limited (Citizen Watches (HK) Ltd, Hong Kong (Citizen Watches Hong Kong) which is 100 percent held by Citizen Watches Company Limited, Japan (a company listed on the Tokyo Stock Exchange), and the third by Hong Kong-based NRIs in Hyderabad-based Netplay Sports Pvt Ltd.
These were cleared by an inter-ministerial committee (IMC) that was set up last year comprising of joint secretaries from various ministries and departments to aid the home secretary headed panel in examining minor investment proposals from Hong Kong and China keeping in view the security risks posed by Chinese companies.
Economic Times report in this matter says “The IMC will clear the proposals from China only on a case by case basis. The committee was set up after many proposals from non-Chinese origin companies were stuck for security clearances post the change in the foreign direct investment (FDI) policy that made prior government approval mandatory for FDI from countries that share a land border with India.”
This issue proves once again why media reports should be taken with a pinch of salt and loads of skepticism considering Bharatiya media’s tendency to mislead.
(Featured Image Source: The Hans India)
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