Temporary impact on investment flow to India due to govt curbs: CEA 

According to a Press Note 3 issued by the Department for Promotion of Industry and Internal Trade (DPIIT) in April, a company or an individual from a country that shares land border with India can invest in any sector here

New Delhi: There will be a temporary impact on investment flow to start-ups due to the curbs imposed by the government to stop opportunistic takeover by firms from countries with which India has border tensions, chief economic adviser K V Subramanian said on Wednesday.

According to a Press Note 3 issued by the Department for Promotion of Industry and Internal Trade (DPIIT) in April, a company or an individual from a country that shares land border with India can invest in any sector here only after getting government approval.

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The decision has bearing on foreign investments from countries like China and Hong Kong. Speaking at a virtual event organized by FICCI, Subramanian said investment, both direct and indirect, coming from countries, especially with which India has border tensions, needs to be scrutinised.

As a result, he said, “There will be some impact on start-up funding in the short run, but I do think that space will get filled by a large number of private equity (PE) companies from other countries.” He was replying to a question on if Press Note 3 will have any impact on investment flow from Hong Kong.

PE firms from other countries are interested in participating in the start-up ecosystem, he said, adding that “I expect this impact to be temporary”. India received FDI worth $2.34 billion (Rs 14,846 crore) from China between April 2000 and December 2019.