Why Modi government might ease FDI norms for solar industry
What's the story
The Indian government is considering relaxing foreign direct investment (FDI) rules in certain sectors, particularly renewable energy such as solar. The move is aimed at attracting Chinese investments and expertise. However, the country also plans to tighten scrutiny in areas like information technology (IT) and data. The deliberations are part of a broader review of Press Note 3, which governs foreign investments from countries sharing land borders with India.
Policy details
What is Press Note 3?
Press Note 3 prohibits entities from countries sharing land borders with India, or where the beneficial owner of an investment in India is situated or a citizen of such country, from investing except through the government route. The policy was amended in April 2020 to prevent opportunistic takeovers or acquisitions of Indian companies amid the COVID-19 pandemic.
Current discussions
Ongoing discussions on FDI relaxation
The Indian government is actively discussing the relaxation of FDI rules in sectors like solar, where domestic industries have sought relaxations. However, any changes would be accompanied by stricter scrutiny for sensitive areas such as IT and data. These talks are still in their early stages and any decision would require approval from the Prime Minister's office.
Minister's view
Caution needed while easing norms, says Sitharaman
Finance Minister Nirmala Sitharaman had previously acknowledged that the restrictions imposed by Press Note 3 have created hurdles in renewable energy projects requiring technical inputs from Chinese experts. She said there have been increasing requests from stakeholders for further access, not just from India but also China. However, she added that caution would have to be exercised while easing these norms.