Govt. Nod Mandatory For FDI From Neighbouring Countries

Move may be aimed at preventing ‘opportunistic takeovers’ by Chinese entities

- Priscilla Jebaraj

In a move that will restrict Chinese investments, the Centre has made prior government approval mandatory for foreign direct investments from countries which share a land border with India. Previously, only investments from Pakistan and Bangladesh faced such restrictions.

The revised FDI policy is aimed at “curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic,” said a press release from the Department for Promotion of Industry and Internal Trade on Saturday.

‘With land borders’

“A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited,” says the new policy.

“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.” Pakistani investors face further restrictions in requiring government approval for FDI in defence, space and atomic energy sectors as well.