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Foreign direct investment into Indian solar concerns from China and other neighboring countries will now have to secure the approval of the Ministry of New and Renewable Energy.

With Indian solar companies weakened by the Covid-19 crisis, the Ministry of New and Renewable Energy (MNRE) has followed the government’s lead by requiring oversight of all foreign investment proposals from neighboring countries.

The federal government has been alarmed by recent moves from Chinese businesses to raise their stakes in Indian companies whose share price has slumped during the coronavirus shutdown or who have suffered cash shortages.

In that vein, the renewables arm of car manufacturer Mahindra & Mahindra recently agreed to sell its stake in three subsidiary units to the CLP India division of Hong Kong-based electric company CLP Group for around Rs340 crore. The sale of Mahindra’s Divine Solren and Cleansolar units has already been completed and the deal for Neo Solren is pending.

Investment from the nations which share a land border with India has previously been waved through but the Ministry of Commerce and Industry’s Department for Promotion of Industry and Internal Trade (DPIIT) has moved to ensure moves from such entities will now have to be processed by the federal government.

The department stipulated: “An entity of a country that shares [a] land border with India, or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under [a] government route and the FDI proposals involving investments from these countries shall now be processed by the concerned administrative ministry/department.”

The MNRE has followed that lead by creating a department to process foreign investment proposals related to the Indian solar industry.