The Narendra Modi-led central government on Saturday, April 18 amended the extant FDI policy to curb the takeovers/acquisitions of Indian companies in the current economic crisis due to the coronavirus pandemic, news agency ANI reported.
Ministry of Commerce & Industry said that the government has reviewed the extant Foreign Direct Investment policy and amended para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017.
After the amendment, the ministry said, "non-resident entity can invest in India, subject to FDI Policy except in those sectors which are prohibited. The entity of a country, which shares a land border with India or where investment owner is situated in or is a citizen of any such country, can invest only under govt route."
"Further, 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.
Click to read full notification: FDI policy amendment amid coronavirus pandemic
Also, government approval will be needed for the transfer of ownership of any existing or future FDI in an Indian firm. "In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction/purview of the para 3.1.1(a), such subsequent change in beneficial ownership will also require Government approval," the government notification said.
Rahul Gandhi's warning after China Bank buys stake in HDFC bank
On Sunday, Rahul Gandhi had warned that the economic slowdown because of the coronavirus pandemic has made Indian companies susceptible to takeovers, and demanded the "corporates" must be protected from "foreign interests".
"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," he had tweeted.
The remarks of the senior Congress leader came on a day when the People's Bank of China (PBOC) purchased 1.01 per cent stake in the HDFC. The Chinese central bank acquired nearly 1.75 crore shares in HDFC during the quarter ended March.