New Delhi: The Centre has amended the foreign direct investment (FDI) policy to check opportunistic takeovers of Indian companies amid the Covid-19 pandemic.
It has decided put all FDI proposals from countries sharing border with India under the government approval route. Companies whose beneficial ownership also lies in such countries will have to undergo government scrutiny for any change in foreign holding.
“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,” the Ministry said in a statement on Saturday.
The changes have been made largely to check the growing influence of Chinese firms in Indian infrastructure companies and banks. Recently, news surfaced that People’s Bank of China increased its stake in Housing Development Finance Corporation to 1.01 per cent from 0.8 per cent.
According to the Ministry of Commerce and Industry, a non-resident entity can invest in India, subject to the FDI policy except in sectors or activities that are prohibited.
Earlier, only Bangladesh citizens or entities incorporated there were allowed to invest through 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,” it said