India's DPIIT limits automatic FDI to investors with up to 10% Chinese shareholding
→Inbound investment teams must file DPIIT reports for any land-border ownership links
Change
India's Department for Promotion of Industry and Internal Trade (DPIIT) now bounds automatic-route foreign direct investment to investor entities whose beneficial owner — as defined under the Prevention of Money‑laundering Act (PMLA), where controlling ownership means entitlement to more than 10% — holds no more than 10% Chinese shareholding.
Why it matters
Entities incorporated in China, Hong Kong, or any country sharing a land border with India cannot access the automatic FDI route and must obtain prior government approval for investments. Investments that have any direct or indirect ownership link to citizens or firms of land-bordering nations must follow DPIIT's additional reporting requirements under the prescribed standard operating procedure. Proposals from those countries in specified sectors will be processed under an expedited government approval timeline of 60 days.
Implications
- — Compliance teams at foreign investor firms and fund managers must verify beneficial‑owner Chinese shareholding against the PMLA controlling‑interest threshold immediately before filing FDI notifications — filings that cannot demonstrate ≤10% Chinese beneficial ownership are ineligible for the automatic route and must proceed only after prior government approval.
- — Deal teams at investor entities incorporated in China or any country sharing a land border with India must secure prior government approval before executing investments in India — transactions lodged without that approval will not qualify for the automatic route and will enter the government approval process.
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Source
View on Times of India