Photo courtesy: moneycontrol.com
New Delhi: The government on Saturday made its prior approval mandatory for foreign direct investments from countries that share land borders with India to curb “opportunistic takeovers” of domestic firms following the Covid-19 pandemic. The move will restrict FDI from China.
Countries which share land borders with India are China, Bangladesh, Bhutan, Myanmar, Pakistan, Nepal and Afghanistan.
According to a press note issued by the Department for Promotion of Industry and Internal Trade (DPIIT), the government has said that an entity of a country, which shares a land border with India can invest only after receiving government approval.
“However, an entity of a country, which 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 the Government route,” says the note. The new rules will also apply to ‘the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly,’ the DPIIT said.
The move comes close on the heels of People’s Bank of China (PBoC) increasing its shareholding in Housing Development Finance Corporation (HDFC).
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