Indian, Chinese companies' JV proposals may get quicker nods
Union home secretary, the person said.
Proposals under Press Note 3 will be expedited only when certain conditions are met. First, the Indian company has to make a case that the technology required and investment proposed is critical for developing the local manufacturing supply chain in areas such as hi-tech components. Second, the management and board of the investee company should not have any Chinese nationals in key roles such as MD/CEO and finance chief, and the Chinese partner can only have a minority stake in any partnership. These conditions will apply to Chinese joint ventures with Indian entities and even with foreign firms operating in India, according to four industry executives.
The government plans underscore acknowledgment in industry circles that current Press Note 3 approvals are taking much longer time even where the Chinese has a minority, non-controlling and non-strategic stake, impacting investor sentiments, decisions and investment flows into India. The ministry of commerce and industry, through which Press Note 3 applications are processed, didn't respond to ET's queries.
The Indian government began scrutinising investments by Chinese firms following worsening of bilateral ties after a deadly border clash in June 2020 between the two armies. Press Note 3 norms issued in 2020 stipulated that a company based in a country that shares a land border with India (such as China) can invest only after Indian government clearance and that the automatic route was thereby withdrawn. The move impacted
