The Commerce and Industry Ministry of India, on the 18th of April, revised the Foriegn Direct Investment (FDI) policies for all neighbouring countries.
According to the
, any neighbouring countries have to take permission of the Government of India (GoI) before investing in Indian companies.
Foriegn investment in India is allowed only after a nod from the Central Government.
The Ministry of Commerce and Industry in India said the revision in the policy has been made to prevent “opportunistic takeovers or acquisitions of Indian companies due to the COVID-19 pandemic.”
The statement released by the Department of Promotion of Industry and Internal Trade (DPIIT) read, “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.” The statement further read, ““A non-resident entity can invest in India, subject to the FDI policy except in those sectors/activities which are prohibited.”
The changes in the FDI policy came after the People’s Bank of China (PBoC) increased its shares holding in Housing Development Finance Corporation (HDFC.)
The Government of India (GoI) prohibited investment from neighbouring countries in Defence, Atomic Energy, pharmaceuticals and telecom industries.
Previously, Bangladesh and Pakistan were prohibited to have automatic route investment in the State. However, with the new amendments, all the neighbouring countries sharing a border with India would be prohibited from investing in Indian companies through an automatic route and have to take government permission.
The new decision would come into effect from the date of the Foreign Exchange Management Act (FEMA) notification.
