In 2020, the Indian government, amid rising tensions with China, introduced 'Press Note Number 3 of 2020', or PN3, requiring prior government approval for investments from entities based in countries sharing a land border with India, including China. This measure was aimed at preventing opportunistic takeovers of Indian companies during the Covid-19 pandemic. As a result, all Chinese investments, direct or indirect, now require government approval, with additional regulatory hurdles and restrictions on participation in management roles and public procurement.
2020年，在与中国关系日渐紧张的情况下，印度政府推出“2020年第3号通知”（PN3），要求与印度陆地接壤的国家（包括中国）的实体在印投资必须事先获得政府审批，该措施旨在防止印度公司在新冠肺炎大流行期间被机会主义收购。目前，中国在印度的所有直接或间接投资都需要政府审批，并在参与管理和公共采购方面受到额外的监管障碍和限制。This article examines recent trends in PN3 application and outlines strategies to increase the likelihood of securing approval. Key strategies include aligning investments with India's economic priorities and demonstrating a long-term commitment to India's economic growth.本文探讨了PN3申请的最新趋势，并概述了提高获批可能性的策略，主要策略包括投资符合印度的经济优先事项，并作出对印度经济增长的长期承诺。The term ‘beneficial ownership’ was deliberately left undefined under PN3, allowing broad interpretation by Indian regulators. In today's globalised world, many companies investing in India have some level of Chinese shareholding. Consequently, numerous global deals have fallen through either due to investor apprehension about breaching PN3 or the failure to obtain the rigorous PN3 approval. For instance, the Indian government has rejected several proposals by Chinese investors to set up manufacturing facilities and generate local employment. Due to the broad applicability and stringent nature of PN3 approval, there have been consistent requests for the government to interpret PN3 in a way that balances monitoring Chinese-influenced investments without hindering those with nominal Chinese holdings.
PN3中故意未对“实益所有权”一词下定义，而允许印度监管机构进行宽泛解释。在全球化背景下，许多在印度投资的公司都持有一定的中国股份，这导致许多全球交易因投资者担心违反PN3或无法获得PN3的严格批准而告吹。例如，印度政府拒绝了中国投资者提出的设立生产设施和创造当地就业机会的多项提议。由于PN3批准的广泛适用性和严格性，人们一直要求印度政府在解释PN3时，既能监督受中国影响的投资，又不妨碍那些名义上持有中国股份的投资。Recent trends indicate that the Indian government may be looking to soften its approach to FDI from China. FDI inflows dropped by 62.17% in the financial year 2023–24, according to RBI data. Meanwhile, India-China trade reached nearly $118 billion, with India facing a trade deficit of over $100 billion. The Economic Survey2023–2024 recommended encouraging Chinese investment in India to boost exports rather than relying solely on trade. As stated in the survey:..it is more effective to have Chinese companies invest in India and then export the products to these markets rather than importing from China, adding minimal value, and then reexporting them.The Economic Survey 2023-2024最近趋势则表明，印度政府可能正在寻求放宽对来自中国的外国直接投资的态度。根据印度储备银行（RBI）的数据，2023-2024财年的外国直接投资流入量下降了62.17%。与此同时，印中贸易额达到近 1180 亿美元，印度面临着超过1000亿美元的贸易赤字。《2023-2024年经济调查》建议鼓励中国在印度投资以促进出口，而不是仅仅依靠贸易。正如调查报告所指出的，让中国公司在印度投资，然后将产品出口到这些市场，比从中国进口、增加最低限度的价值，然后再出口更有效。——《2023-2024年经济调查》Accordingly, the Finance Minister of India recently hinted at potential relaxations for investments from China and neighbouring countries, suggesting in her post-budget speech that opening up investment from these regions is possible. We hope the government will ease PN3 restrictions in non-sensitive sectors, provided investments meet criteria for national security and data integrity. Such amendments should address concerns from PN3, ensuring capital flow and maintaining India's attractiveness as an investment destination without compromising PN3's original intent.印度财政部长最近暗示可能放宽对中国和邻国投资的限制，她在预算案后的讲话中表示，可能开放这些地区的投资。我们希望政府在投资符合国家安全和数据完整性标准的前提下，放宽对非敏感行业的PN3限制。此类修订既不会损害PN3的初衷，又能解决投资者对PN3的担忧，确保资本流动，保持印度作为投资目的地的吸引力。
2 Recommendations For Those Applying For PN3 Approval
While the Economic Survey 2023-2024 and the recent statement by the Finance Minister of India raise hopes for potential relaxations to the PN3 regime, our experience indicates that the government of India typically favours PN3 applications in the following cases:虽然《2023-2024年经济调查》和印度财政部长最近的声明为PN3制度的潜在放宽带来了希望，但我们的经验表明，印度政府通常倾向于批准以下情况的PN3申请：Data security: There must be no concerns regarding data storage, leakage, or sharing. The Indian government is particularly cautious about investments in sectors where data security is crucial, ensuring compliance with local regulations and safeguarding national security and individual privacy.1.数据安全：印度政府对数据安全至关重要的行业的投资尤为谨慎，投资者应确保遵守当地法规，不存在数据存储、泄漏或共享方面的问题，以维护国家安全和个人隐私。Avoidance of sensitive sectors:Investments should avoid sensitive sectors such as defence, telecommunications, and data processing.2.避开敏感行业：投资应避开国防、电信和数据处理等敏感行业。Significant employment generation potential: Investments should demonstrate a clear potential for creating substantial employment opportunities within India.3.具备巨大的就业创造潜力：投资应显示出具备在印度创造大量就业机会的显著潜力。Promotion of local industry: Investments should promote the growth of local industries or seek to plug the gaps in existing capabilities and include the potential for technology transfer. Projects that can enhance the capabilities of domestic industries, bring in new technologies, and improve the overall industrial landscape are preferred.4.促进当地产业发展：投资应促进当地工业的发展或弥补现有能力的不足，并具有技术转让的潜力，政府会优先考虑能提高国内产业能力、引进新技术并改善整体产业格局的项目。Shareholding and management structure: Preference is given to applications where the majority of the investment and key managerial positions are held by Indian shareholders, such that control remains within the country.5.股权和管理结构：政府优先考虑大部分投资和关键管理职位由印度股东担任的申请，以便印度仍具备控制权。Legitimate Indian investor/joint venture partner: The Indian investor should not be perceived as a mere passthrough entity for foreign shareholders and must have relevant sectoral experience. The government aims to avoid scenarios where foreign entities use local companies as fronts to bypass regulatory requirements.6.合法的印度投资者/合资伙伴：印度投资者不应仅被视为外国股东的穿透实体，而必须具有相关的行业经验，以避免外国实体以当地公司为幌子绕过监管要求。Since PN3 approvals are granted on a case-by-case basis, it is crucial for the application to clearly outline the benefits of the proposed foreign investment, even if it does not meet all the specified requirements. The guidelines are indicative, so the application should demonstrate how the investment supports the country's development goals and mitigates potential risks associated with foreign control and influence.由于PN3是逐案审批的，即使该项投资并不符合所有要求，申请中也必须明确概述拟议外国投资的益处。这些指导方针具有指示性，申请中应说明该投资如何支持国家的发展目标，并降低与外国控制和影响相关的潜在风险。
