Government nod mandatory for all FIDs from neighbouring countries

Report By Annie Mathew | Bengaluru | Last Updated at April 18 2020

Days after china’s central bank raised its stake in HDFC taking advantage of fall in its share prices, the centre on Saturday rushed to amend the country’s foreign direct investment rules to curb opportunistic takeovers by neighbouring countries.

The department for the promotion of industry and internal trade under commerce ministry said in a notification that all activities in which foreign investment is permitted. The move comes in the midst of a score of small and medium size companies writing to the MSME minister seeking a temporary half in FID through automatic route.

In the letter last week, they had raised the issue of Indian cooperate sector being sold in distress to Chinese companies. With the valuation of companies taking a severe hit due to COVID-19 crisis, the government is understood to have undertaken a strict scrutiny of the FID  investments. The letter was forwarded to PM office for further consideration.

The notification said that people of Pakistan will now be allowed to invest in Indian companies, only under the government route, and will not be allowed to invest in defence, space or atomic energy sector.

At present, a non resident entity can invest in India subject to the FID policy except in those sectors or activities which are prohibited. However a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the government route