India amends FDI policy to prevent ‘opportunistic acquisitions’ of Indian companies by the Chinese
- The Indian government introduced amendments in the Foreign Direct Investment (FDI) Policy to prevent “opportunistic acquisitions” of Indian companies by neighbouring countries.
- The revised policy states that the countries that share land borders with India can only invest in Indian companies with government’s approval.
- Any investments in these 17 sectors — including defence, space, pharmaceuticals and atomic energy — needs government nod.
TOP VIDEOS FOR YOUThe revised policy states that the countries that share land borders with India can only invest in Indian companies with government’s approval. It will be applicable to large shareholding — more than 10%, officials said.
“A non-resident entity can invest in India, subject to the
“The recent amendment to India’s FDI Policy by DPIIT was much needed because in the current depressed economic environment, Indian companies are vulnerable to predatory acquisitions. This step seems to have been taken in the background of the high number of direct and indirect Chinese investments in India,” said Ambika Khanna, senior researcher at Gateway House.
“Such investments come through opaque beneficial ownership structures making it difficult to ascertain the ultimate beneficial owner,” she added.
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As per the Commerce and Industry Ministry, any investments in these 17 sectors — including defence, space, pharmaceuticals and atomic energy — needs government nod.
That means, the restrictions that were earlier imposed on Bangladesh and Pakistan will now apply to other neighbouring countries like China as well, according to the Department for Promotion of Industry and Internal Trade (DPIIT).
“A citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment,” it added.
Moreover, in case of the transfer of ownership in an FDI deal, the acquisitions can be made only via government route.
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