India changes FDI norms to block hostile investment from China; China slams it as “discriminatory” policy

Last week, china central bank has bought 1.01% stake in hdfc

Story Highlights
  • China calls India move to amend FDI norms discriminatory
  • India amends FDI policy to prevent opportunistic acquisitions
  • Indian stock markets have fallen 25 per cent since February 15, wiping out tens of billions of dollars of value.

NEW DELHI: China on Monday accused India of discriminatory practices and demanded that it revise its foreign direct investment (FDI) norms.
India’s new rules for FDI violates WTO (World trade organisation) principles of non-discrimination and are against free and fair trade, said Chinese embassy spokesperson.

This statement emerged after India made some amendments on the current FDI policy on Saturday.

India stepped up scrutiny of investments from companies based in neighboring countries, in what is widely seen as a move to stave off takeovers by Chinese firms during the coronavirus outbreak. The changes to FDI rules on investment were meant to curb opportunistic takeovers and acquisitions, the government said.

Although India did not name China, but it was obvious that the move was aimed at preventing hostile takeovers by Chinese companies of Indian firms whose market values have dipped because of covid-19 related uncertainties.

“The impact of the policy on Chinese investors is clear,” Ji Rong, a spokesman at the Chinese embassy in New Delhi, said in a statement.

The Government of India has reviewed the extant Foreign Direct Investment (FDI) policy. This amendment in the FDI policy has been made to curb any takeovers/acquisitions of Indian companies due to the ongoing COVID-19 pandemic. To achieve this objective, the Government of India has amended the para 3.1.1 of extant FDI policy as contained in “Consolidated FDI Policy, 2017″.

The new rules will prevent those entities of a country, which shares land border with India, from buying large stakes in Indian companies, either directly or through friendly nations and hence the new rules will curb the ‘Opportunistic Takeover or acquisition’ of Indian Companies when the whole nation is battling with the COVID-19 pandemic. The new rules will allow the non-resident entities of countries such as China, Bhutan, Nepal and various other nations, to invest in India only under the Government route.



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