FinMin proposes restriction on foreign investment in pension funds from China

Foreign investment in pension funds regulated by the Pension Fund Regulatory and Development Authority (PFRDA) is capped at 49 per cent with automatic route. According to a draft notification circulated for comments, "A government approval would be required for the investing entity or individual from any of the bordering countries including China.

Amidst growing tension between India and China, the finance ministry on Friday proposed putting restrictions on foreign investment in pension funds from any of India's bordering countries. Foreign investment in pension funds regulated by the Pension Fund Regulatory and Development Authority (PFRDA) is capped at 49 per cent with automatic route.

According to a draft notification circulated for comments, "A government approval would be required for the investing entity or individual from any of the bordering countries including China. The relevant provisions of FDI policy issued from time to time would apply in all such cases." Any foreign investment from these countries will be subject to approval from the government. The restriction should be applicable from the date of notification by the Government of India.

The development comes at a time when Indian and Chinese armies are engaged in a standoff in Pangong Tso, Galwan Valley, Demchok and Daulat Beg Oldie in eastern Ladakh. The violent clash stirred anti-China sentiments in the country, with protestors and traders' bodies calling to boycott Chinese products.

The changes have been proposed in accordance with Department for Promotion of Industry and Internal Trade (DPIIT) guidelines issued in April. Currently, government permission is mandatory only for investments coming from Bangladesh and Pakistan.