MNRE Creates FDI Cell to Process Foreign Investment Proposals

In order to keep a closed eye on the investment made by neighbouring countries in India, the Ministry of New & Renewable Energy (MNRE) has set up a new cell in the ministry for taking care of the foreign direct investment (FDI) into the sector.

The Ministry said in a statement that, the FDI cell will be comprised of two members i.e. Amitesh Kumar Sinha, Joint Secretary (Solar), MNRE, who is the Nodal Officer; and Ruchin Gupta, Director, MNRE. This Cell will further process FDI proposals.

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The move came after the Central Government had recently reviewed the FDI policy for curbing opportunistic takeovers and acquisitions of Indian companies on the back of current coronavirus pandemic.

In line with this, the Department for Promotion of Industry and Internal Trade (DPIIT) has informed that “an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under Government route and the FDI proposals involving investments from these countries shall now be processed by the concerned Administrative Ministry and Department.”

Now, India’s neighbouring countries which share land borders – Bangladesh, Nepal, Pakistan, China, Myanmar, Bhutan and Afghanistan, will now be permitted to invest only through approval route. This new policy had blocked the indirect acquisition of investments by entities based in neighbouring countries. With this, change in ownership of the investment will also have to be cleared by the government.

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On April 18, 2020, DPIIT had issued a press note regarding this change in policy, which would impact both direct & indirect FDI from China.

FDI in India is allowed via automatic route in most of the sectors. However, some areas like – defence, telecom, media, pharmaceuticals and insurance, government approval is mandatory for foreign investors.

Thus, in investment via government route, the foreign investor has to take prior consent of the respective ministry and department. While, in the automatic approval route, the investor has to just inform the RBI post-investment made.

On the other side, in 9 sectors FDI is prohibited i.e. lottery business, gambling and betting, chit funds, Nidhi company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.

In April this year, the Power Minister RK Singh said that during last 6 years, cumulative renewables installed capacity in India grew by about 72 per cent from 80.8 GW to 138.9 GW and that the clean energy sector in India has received USD 6.1 billion in FDI during that period.