Business & Economy

COVID-19: Govt amends FDI policy to curb opportunistic takeovers, acquisitions of India companies

NetIndian News Network

New Delhi, April 18, 2020

The Government today said it had amended the extant Foreign Direct Investment (FDI) policy to curb opportunistic takeovers or acquisitions of Indian companies due to the current coronavirus (COVID-19) pandemic.

This has been done by amending para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017, an official press release said.

Earlier, a non-resident entity could invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, a citizen of Bangladesh or an entity incorporated in Bangladesh could invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan could invest only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

The latest amendment means that 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.

The above decision will take effect from the date of FEMA notification, the release added.

NNN

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