The relaxations in the existing FDI norms for land-bordering neighbours will attract more investments, the Department for Promotion of Industry and Internal Trade (DPIIT) said on Wednesday.
DPIIT highlighted that the amendments will be notified by the Department of Economic Affairs once "suitable changes" to the Foreign Exchange Management Act (FEMA) are made. FEMA, notably, refers to legal provisions related to foreign exchange, external trade and payments, and govern promoting the orderly development of the foreign exchange market in India.
Additionally, the department said, relaxations will be focused on two things – giving clarity with regards to beneficial ownership by providing a definition, and providing an expedited route with a defined timeline of 60 days for specified sectors.
Eletronics is one sector with high exposure. Besides that, the relaxations also aim to increase manufacturing in the country and boosting investment into capital goods.
"Electronics manufacrturing is already seeing good response. This will aid in increasing that," DPIIT underlined.
On Tuesday, the central government eased norms for foreign direct investment from all countries that share land borders with India. After the new changes, in the investments from land-bordering countries up to 10% non-controlling stake will come under the automatic route without prior approval.
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The cabinet has made amends in the Press Note 3 (PN3) framework governing FDI from land-bordering countries. The decision was taken in a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi on Tuesday.
PN3 is an Indian FDI policy mandate requiring prior government approval for all investments from countries sharing a land border with India.
Addressing why PN3 was opened up in calibrated manner and not scrapped, the DPIIT remarked, "It's a changing world, one shouldn't look at only historical trends."
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