India has amended FDI rules to expedite approval for investments from neighboring countries, specifically targeting manufacturing in electronics, polysilicon, and ingot-wafers with a promised 60-day processing window.
The policy aims to reduce supply chain reliance on China by encouraging localization, while mandating significant technology transfer and commitments to skill local workers for manufacturing roles.
Officials emphasize that technology transfer and local skilling are prerequisites for swift approvals, seen as vital for the sustained development and backward integration of these critical industrial segments.
Main Topics: Amendments to FDI rules; Electronics manufacturing; Technology transfer requirements; Skilling of local workforce; Reducing supply chain dependence on China.
Commitments towards technology transfer and employment, along with skilling of locals for manufacturing roles may count as prerequisites under new rules for swift processing of foreign direct investment proposals from neighbouring nations, officials told ET.
On Tuesday, the Cabinet amended the FDI rules notified through Press note 3 in 2020 that had tightened approvals for investments from countries sharing a land border with India. With a promise to process FDI proposals for the manufacturing of electronic capital goods, electronic components, polysilicon and ingot-wafers within 60 days, the new rules will have a significant impact on the electronics sector.
The move will ease capital flows into sectors where China remains the overwhelming global leader and keeps a tight control on supply chains. While the government is keen to localise production for these critical segments, it will also ensure that significant transfer of technology takes place, officials said. "This is needed for sustained development of these segments and their backward integration in India," an official said.
The government has been working on streamlining the process of tech transfer through incentives. For instance, expenditure towards tech transfer may be included for calculating cumulative incremental investment for meeting threshold criteria under the guidelines of the Centre's Electronic Component Manufacturing Scheme (ECMS), ET reported earlier. Foreign entities also need to clearly commit to skilling local employees who can expeditiously take up key roles in manufacturing units, the official said. "The gap between current technical education and industry requirements means Indian manufacturers must invest heavily in remedial training to workers, a challenge that is particularly acute in the electronics manufacturing space," he said.
On Tuesday, the Cabinet amended the FDI rules notified through Press note 3 in 2020 that had tightened approvals for investments from countries sharing a land border with India. With a promise to process FDI proposals for the manufacturing of electronic capital goods, electronic components, polysilicon and ingot-wafers within 60 days, the new rules will have a significant impact on the electronics sector.
The move will ease capital flows into sectors where China remains the overwhelming global leader and keeps a tight control on supply chains. While the government is keen to localise production for these critical segments, it will also ensure that significant transfer of technology takes place, officials said. "This is needed for sustained development of these segments and their backward integration in India," an official said.
The government has been working on streamlining the process of tech transfer through incentives. For instance, expenditure towards tech transfer may be included for calculating cumulative incremental investment for meeting threshold criteria under the guidelines of the Centre's Electronic Component Manufacturing Scheme (ECMS), ET reported earlier. Foreign entities also need to clearly commit to skilling local employees who can expeditiously take up key roles in manufacturing units, the official said. "The gap between current technical education and industry requirements means Indian manufacturers must invest heavily in remedial training to workers, a challenge that is particularly acute in the electronics manufacturing space," he said.
Meridiano
