Government mulls to step up screening framework for FDI

The Indian government is planning to adopt more secure screening framework for foreign direct investment (FDI) coming in the country.

The multiple ministries, including Home Ministry, Finance Ministry and DPIIT are reportedly discussing the framework and draft a more advanced security protocol.

The govt is looking into the elements of security protocol as there are some concerns on FDI coming in via automatic route, said ET report quoting govt official.

The ministries are also in talks to security agencies to assess certain restrictions and whether new safeguards can be added. It can also ask RBI to furnish more information from a company bringing in FDI in India, added the report.

At present, India allows FDI in most sectors through automatic route.

Last year in December, the centre had also tightened the FDI conditions in the online space. It outlined that an e-commerce platform with FDI cannot exercise ownership over the inventory sold on its platform.

E-comm policy implemented in Feb drew flak from Industry, the govt is also planning to come up with comprehensive policy by next year. Currently, the govt allows up to 100% FDI under the automatic route in the marketplace model of e-commerce.

Overall, India witnessed a 28% rise in FDI inflow to $16.3 billion.

Of late, there has been a wider acceptance of stringent screening framework for FDI. The US had recently beefed up scrutiny of Chinese investments after the trade war between both the firms. The EU also adopted more secure screening framework for FDI.