Crisil Intelligence in its latest report has said that the government's amendment to Press Note 3 (PN3) is likely to increase the share of Chinese funds in the overall foreign direct investments (FDI) attracted by India to over 2 per cent, the level it stood at before the Press Note 3. It said between 2014 and 2019, China, including Hong Kong, contributed about 2% of India's FDI, which contracted to 0.27 per cent after the introduction of new rules in Press Note 3. It said easing of PN3 norms is expected to unlock a pipeline of pending proposals, potentially driving a near-term uptick in inflows from China, including Hong Kong. The entity expects the government move to accelerate FDI inflows into India, strengthening its domestic capabilities and reducing reliance on imports. 

The report said the introduction of the time-bound 60-day approval window for specified manufacturing sectors, including capital goods, electronic capital goods, electronic components, polysilicon, and ingot-wafer, is set to simplify and expedite collaborations between Indian and Chinese firms in emerging sectors. Citing government data, it said government received investment proposals totaling Rs 75,691 crore under the tightened PN3 FDI rules and of these, only Rs 13,625 crore worth of proposals received approval. The proposals rejected formed approximately 5 per cent of the country's average annual FDI inflow over the past five years.

In order to curb opportunistic takeovers/acquisitions of Indian companies due to the COVID-19 pandemic, the government had amended the extant FDI Policy vide PN3(2020) dated April 17, 2020. The real impact of the amendment will be visible over the medium to long term, the report expecting an acceleration in technology partnerships, collaborations and mergers and acquisitions which will help India move up the value chain across sectors and become a key player in the global value chain.