Chinese investment in India falls 28.5% YoY to $163.77 million in FY20

FDI inflow from China has declined on an annual basis from $350.22 million in 2017-18 to $229 million in 2018-19 and further to $163.77 million in 2019-20

Chinese Foreign Direct Investment (FDI) in India declined by 28.48 per cent year-on-year to $163.77 million in the financial year 2019-20, according to an official statement, as souring relations between New Delhi and Beijing led to a fall in investor confidence. The fund inflows from Chinese companies in India have  declined on an annual basis from $350.22 million in 2017-18 to $229 million in 2018-19, Parliament was informed on Monday.

Minister of State for Finance Anurag Singh Thakur informed Lok Sabha that the FDI further came down to $163.77 million in FY20.

Meanwhile, the fund outflow from India stood at $20.63 million in calendar year 2020 as against $27.57 million in the corresponding period last year, he said in a written reply on the first day of the monsoon session.

Earlier in April this year, the government had tightened its FDI policy to restrict Chinese firms from acquiring stake in Indian companies. In a press note issued on April 17, the Department for Promotion of Industry and Internal Trade (DPIIT) had said the revision of the FDI policy is meant to curb "opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic". The fact that the revision was specifically meant to have a control on FDI from entities or citizens of any country that shares land borders with India makes China its prime target.

Thakur informed the House that the government issued press note earlier this year to curb opportunistic takeovers or acquisitions of Indian companies due to the current COVID-19 pandemic. "A non-resident entity can invest in India, subject to the FDI policy except in those sectors/activities which are prohibited. "However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route," he said quoting the press note.

"A citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment," he added.

The government has tightened the noose around Chinese investments in India, especially in the public sector, after the Galwan Valley border clash in June. Over 100 mobile apps, including popular Chinese video app TikTok, have also been banned, citing threats to India's national security over alleged links to the Chinese government.

By Chitranjan Kumar

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