MNRE Set Up FDI Cell to Route Foreign Investment Applications

In order to keep a closed eye on the investment made by neighboring countries in India, the Ministry of New & Renewable Energy (MNRE) has announced that it has set up a new cell in the ministry for taking care of the foreign direct investment (FDI) into the sector.

The Ministry said in a declaration that, the FDI cell will be included of two members i.e. Amitesh Kumar Sinha, Joint Secretary (Solar), MNRE, who is the Nodal Officer; and Ruchin Gupta, Director, MNRE. This Cell will further process FDI applications.

The move came after the Central Government had lately reviewed the FDI policy for curbing unscrupulous takeovers and acquisitions of Indian companies on the back of present coronavirus pandemic.

In line with this, the Department for Promotion of Industry and Internal Trade (DPIIT) has informed that “an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under Government route and the FDI proposals involving investments from these countries shall now be processed by the concerned Administrative Ministry and Department.”

Now, India’s neighboring countries which share land borders – Bangladesh, Nepal, Pakistan, China, Myanmar, Bhutan and Afghanistan, will now be allowed to invest only through approval route. This new policy had blocked the indirect acquisition of investments by entities based in neighboring countries. With this, change in ownership of the investment will also have to be cleared by the government.

On April 18, 2020, DPIIT had issued a press note regarding this change in policy, which would impact both direct & indirect FDI from China.

FDI in India is allowed via automatic route in most of the sectors. However, some areas like – defence, telecom, media, pharmaceuticals and insurance, government approval is obligatory for foreign investors.

Thus, in investment via government route, the foreign investor has to take prior consent of the respective ministry and department. While, in the automatic approval route, the investor has to just inform the RBI post-investment made.