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Revised FDI policy likely reopen Chinese funding for Indian startups

EntrackrEntrackr · 1d ago
Revised FDI policy likely reopen Chinese funding for Indian startups
Medial

Revised FDI policy likely reopen Chinese funding for Indian startups The Union Cabinet on Tuesday approved amendments to India’s FDI policy for investments from land-bordering countries, including China, to ease funding flows for startups and deep-tech firms. The decision, chaired by Prime Minister Narendra Modi, revises provisions introduced under Press Note 3 (2020), which had mandated government approval for investments from entities based in land-bordering countries or where the beneficial owner was located in such jurisdictions. Under the revised framework, investments with up to a 10% non-controlling stake from a beneficial owner in a land-bordering country will be allowed through the automatic route, subject to sectoral caps and disclosures to DPIIT. The move is expected to unlock capital from global venture capital and private equity funds primarily from China. Startups had previously faced a blanket ban and delays in raising capital due to the approval requirement under the policy, particularly when investments involved neighbouring countries such as China. The government has also set a 60-day timeline to approve investments from these countries in select manufacturing sectors, including capital goods, electronic components, polysilicon, and ingot-wafer manufacturing. The sector list may be revised by the Committee of Secretaries. However, majority shareholding and control of the investee entity must remain with resident Indian citizens or entities owned and controlled by them, according to the release. The restrictions under Press Note 3 (2020) were introduced in April 2020 during the COVID-19 pandemic to prevent opportunistic takeovers of Indian companies. The policy gained further significance after relations between India and China deteriorated following the 2020 Galwan Valley clash. The latest changes aim to balance national security concerns while improving ease of doing business and attracting more foreign investment into India’s startup and technology ecosystem. The move is likely to revive interest from Chinese investors and conglomerates, which had largely faded after India imposed restrictions on Chinese tech companies and investments. While funding norms have now been eased, it remains unclear whether Chinese tech companies such as TikTok will be allowed to operate in India again.

A pivot in monetary policy in October is likely

Money ControlMoney Control · 1y ago
A pivot in monetary policy in October is likely
Medial

- The forthcoming Monetary Policy Committee (MPC) review could bring about policy easing after 14 meetings of maintaining status quo. - Three factors, geopolitical tensions, US Federal Reserve's interest rate decision, and performance of the southwest monsoon, have delayed the easing of monetary policy. - The market is curious about the perspectives of the new committee members on inflation, growth, and liquidity. - Inflation has dropped below 4% in July and August, creating room for monetary policy easing. - The US Federal Reserve's rate cut has opened the door for rate cuts in emerging markets, including India. - Some segments of the economy are showing signs of weakening growth, reflecting the impact of higher interest rates and tighter lending norms.

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