India Changes FDI Policy To Block Threat Of Takeovers From Countries Like China

India tightens its foreign investment rules to block “opportunistic takeovers” by mandating that all the investments from neighbouring countries, including China, would now require government approval.

The move has been taken to debar the threat of “opportunistic” Chinese takeover of Indian companies, whose valuations have been badly hit by the coronavirus pandemic.

The strict norms that were already in effect for investments from countries like Pakistan and Bangladesh will now extend its policies to China as well.

Chinese Ambassador to India Sun Weidong tweeted that China had been the first country to alarm the world against coronavirus and it is also helping other countries to fight the virus by providing assistance in terms of medical supplies.

Most FDI flows into India are under the automatic route, which means companies only need to inform authorities after the investment is made. Untill now, Chinese investments were automatically allowed, similar to those from other nations, in all but 16 sectors, such as telecom, defence, and national security.

Chinese companies strong grip over Indian market have caused unease on account of historically tense relations, with the two having fought a war in the early 1960s and maintained limited ties since.