Taiwan may be treated as separate entity for FDI

Sandeep Dikshit
Tribune News Service
New Delhi, June 3

The central government is sorting out the lack of clarity in an April 13 notification that banned Chinese firms from making investments through the automatic route.

As India considers Taiwan to be part of China, as do an overwhelming majority of countries in the world, the central government is considering whether its investments will undergo governmental scrutiny before being permitted.

Taiwan has so far made miniscule investments, estimated at less than 1 per cent in the past two decades, which has not made it a factor in the government’s calculations. At a time of heightened tensions on the line of actual control (LAC) with China, the central government is considering whether it should categorise investments from Taiwan as automatic while subjecting those from the mainland to scrutiny, said sources.

The sources said Hong Kong will be considered separate from China and investments from there will be under the automatic route. There is no political dynamite attached to this segregation because China itself considers Hong Kong as part of “one country, two systems.’’

It is different in case of Taiwan. The country does not have a formal embassy in the country and its handful of diplomats here operate under the cover of a trade office. Only a few countries in the Caribbean and the Pacific Islands, all of them close to the US, recognise Taiwan as a separate country and do business with it as a sovereign nation.

The notification in question bars investment from any country that shares a land border with India or from any citizen of such a country. Politically Taiwan is considered part of China while from the commerce point of view, New Delhi treats it as a special entity. It remains to be seen that any Governmental clarification on these lines is taken in the right spirit by China.