The industry has suggested softening rules to allow investment from India's neighbouring countries amid shifting of the electronics manufacturing ecosystem to the country as many companies adopt the China+1 strategy.
In 2020, the Department for Promotion of Industry and Internal Trade, in Press Note 3, made prior government approval mandatory for foreign direct investment from countries sharing a land border with India, irrespective of sectoral caps. The aim was to curb opportunistic takeovers of domestic firms after Covid-19.
"This applied to all sectors, without exception (and) needs to be amended to provide clarity on shifting of the ecosystem to India," the Confederation of Indian Industry (CII) and National Council of Applied Economic Research (NCAER) said in a study. CII-NCAER said the defensive steps were undertaken to arrest strategically significant acquisitions of pandemic-stricken companies by neighbours, particularly China.
According to the study, India is an attractive destination among other Asian countries owing to the China+1 strategy being adopted by several companies around the world to diversify the supply chain.
Read more at: https://economictimes.indiatimes.com/news/economy/policy/india-need-to-soften-fdi-rules-rationalise-tariff-to-become-an-electronics-hub/articleshow/95189617.cms