CLOSE WATCH OVER INVESTMENT FROM CHINA-DECODED-CS ROHIT KUMAR

As we are aware that after COVID-19 share prices of most of Indian Companies are trading at very low price and China wants to acquire shares of such companies at low price to control most of Indian Companies.

Therefore, Government of India has reviewed the extant FDI policy for curbing opportunistic takeover/acquisitions of Indian companies and accordingly amended para 3.1.1 of Consolidated FDI Policy 2017.

REVISED POSITION:

A non-resident entity can invest in India, 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.

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.

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.

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