The Department for Promotion of Industry and Internal Trade released a Press Note 3 on 17/04/2020 under FDI Policy Section to secure the Indian Companies from opportunistic takeovers/acquisitions in the current situation arising out of COVID-19. The Government has reviewed the FDI policy and revised Para 3.1.1 of the Policy related to the eligibility for foreign investors for Foreign Direct investment in India. The decision will take effect from the date of FEMA notification. The revision made in FDI guidelines are as under:

Eligibility for Foreign Direct Investment in India:

  1. Foreign Direct Investment in India is allowed subject to the FDI policy, excluding the prohibited sectors/activities.
  2. “An entity or citizen or beneficial owner of investment into India belonging to such country which shares a land border with India are allowed to invest in India only under Government route/approval route.”
  3. A citizen of Pakistan or an entity incorporated in Pakistan can invest in India only through Government Route.
  4. The above-mentioned position shall be applicable to all sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment. 

In case of Transfer of Ownership:

Any transfer of ownership of existing or future FDI in an entity in India is resulting in the transfer of beneficial ownership to entities or persons belonging to such countries which share land borders with India, then such changes in beneficial ownership will require Government Approval.

The Government is taking all necessary measures to protect the Indian entities. Earlier, the restriction for investment in India was for investment by individuals /entities incorporated in Bangladesh and Pakistan. Now the list of restricted countries shall also include countries like China, Bhutan, Nepal, Burma, Myanmar and Afghanistan. 

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