TLI Staff
New Delhi: Days after Rahul Gandhi raised concerns over Chinese takeover of Indian companies, Modi government has changed FDI rules to ensure that Chinese investments go through increased scrutiny.
Amending the FDI rules, the Department for Promotion of Industry and Internal Trade (DPIIT) has said the revision of the FDI policy is meant to curb “opportunistic” takeovers/acquisitions of Indian companies due to the current Coronavirus pandemic.
Congress scion Gandhi had created flutter on micro-blogging site Twitter saying “The massive economic slowdown has weakened many Indian corporates making them attractive targets for takeovers. The government must not allow foreign interests to take control of any Indian corporate at this time of national crisis.”
The massive economic slowdown has weakened many Indian corporates making them attractive targets for takeovers. The Govt must not allow foreign interests to take control of any Indian corporate at this time of national crisis.
— Rahul Gandhi (@RahulGandhi) April 12, 2020
His remarks came close on the heels of China’s central bank deciding to increase its stake in HDFC, India’s largest housing mortgage lender.
As per the amended FDI rules, a non-resident 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 with prior government permission.
The change was made on April 17.
As per the extant rule, a non-resident entity can invest in Indi subject to the FDI policy except in those sectors/activities which are prohibited.
“However, an entity of a country which shares 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,” the Department for Promotion of Industry and Internal Trade (DPIIT) has said.
“Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the government rule, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment,” it added.
Rahul Gandhi thanked the government for taking the necessary step. “I thank the Govt. for taking note of my warning and amending the FDI norms to make it mandatory for Govt. approval in some specific cases,” he tweeted.
Ever since BJP came to power under the leadership of Prime Minister Narendra Modi, India has relaxed FDI rules in most of the sector barring the sensitive sectors of defence, space and atomic energy.