At a time when geopolitical tensions between India and China remain high in the wake of deadly clash at the Ladakh border last week, active deliberations are ongoing in New Delhi to impose additional checks and measures on Chinese investments in the country.

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Government officials told CNBC-TV18 that the government is deliberating how best to supervise Chinese investments, with security concerns taking precedence.

Some of the measures under active consideration include having a clear definition of substantial beneficial ownership and to see that the foreign portfolio investment (FPI) route is under check when it comes to Chinese investments, government officials added.

However, these are just discussions and deliberations and no final decision has been taken as yet, clarified the government officials.

"Deliberations at the highest possible level, including the key government offices such as the PMO , finance ministry, commerce and industry ministry, home ministry, SEBI , RBI

Deliberations are also on to check whether any such move would be in compliance of the World Trade Organisation (WTO) norms and do not flout any global investment treaties, officials said.

On the move regarding substantial beneficial ownership, “the government is considering clarifying definition of substantial beneficial ownership at 10 percent,” said officials. This move is aimed at preventing routing of Chinese investment via any third country.

Currently, substantial beneficial ownership is defined under the Prevention of Money Laundering Act, 2002 (PMLA), where it is considered with 25 percent ownership; and under the Companies Act it is considered with 10 percent ownership.

The Ministry of Finance is also in favour of keeping additional checks on FPIs by Chinese investors via market route, for which it is in discussions with the banking regulator RBI and market regulator SEBI.

The finance ministry could also consider tweaking the FPI norms to reach its objectives.

“Finance ministry is of a view that if a Chinese FDI

The government’s final call is awaited.

Also read: India-China clash in Ladakh: Maharashtra to maintain status quo on MoUs with Chinese firms

First Published:Jun 22, 2020 7:10 PM IST