oppn parties FDI Rules Changed To Prevent Predatory Acquisitions By Chinese Firms

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  • Supreme Court approves two-child norm for government jobs in Rajasthan
  • DMK issues rocket ad with Chinese flag, PM Modi slams party
  • BJP alleges that Congress workers raised slogans like 'Pakistan jindabad' outside Karnataka assembly after the results for the RS polls were declared. CM Siddaramaiah promises stern action if claim found true
  • Calcutta HC says any agency can arrest absconding Sandeshkhali TMC strongman Sk Shahjahan
  • Himachal Pradesh Speaker suspends 15 BJP MLAs for unruly behaviour
  • Joint teams of Navy, NCB and Gujarat ATS seized a boat with 3200kgs of narcotics in high seas off Gujarat coast. Five crew members were also arrested
  • Centre tells Supreme Court that economic disaster will follow if states are allowed to tax mineral land
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  • Sunil Bharti Mittal of Bharti Enterprises was conferred the honorary Knighthood by Britain's King Charles III for services rendered in furthering business relations between the UK & India
  • RIL to merge Viacom18 with Disney's Star in $8.5bn deal, Nita Ambani to lead the board of merged entity
  • Vodafone Idea shares fall nearly 15% over fears of huge fund raising
  • Stock markets crash on Wednesday: Sensex loses 790 points to 72304 and Nifty 247 points to 21951
  • BCCI gets tough, removes Shreyas Iyer and Ishan Kishan from central contracts for missing Ranji Trophy. In a first, it starts fast bowling contracts to reward emerging players like Akash Deep and four others
  • Tennis: Sumit Nagal loses in first round of Dubai Duty Free tournament
  • WPL: UP Warriorz beat Mumbai Indians by 7 wickets
Bengal police arrests TMC leader Sk Shahjahan, the prime accused in the Sandeshkhali disturbances
oppn parties
FDI Rules Changed To Prevent Predatory Acquisitions By Chinese Firms

By Sunil Garodia
First publised on 2020-04-19 11:21:04

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

The government has done well to make changes in the FDI rules to ensure that Chinese firms do not make predatory strikes on Indian companies stressed by the Covid-19 pandemic and the subsequent lockdown in India. Although fears and worries were floating around in corporate corridors, the issue was first raised in the public domain by the Congress leader Rahul Gandhi. He has also thanked the government for having taken the decision. India was not alone in having worries on this score. Countries across the globe have been quick to amend rules to prevent Chinese firms from acquiring their companies in these troubled times.

The FDI rules in India have now been amended to ban automatic approval of any investment in any Indian firm by any company from a country that shares a border with India. Since many such Chinese investments are routed through countries such as Hong Kong, Singapore and other tax havens, the rules have also been amended to include any investment in which Chinese citizens or companies have beneficial ownership. All such investments will now require prior government approval. The government must have been alarmed when it was recently reported that the Public Bank of China had acquired a 1% stake in HDFC through open market operations following the Foreign Portfolio Investment (FPI) route. The shares prices of many companies in India have been battered down to new lows and this might seem attractive to the Chinese. Hence the government moved in quickly to amend the rules.

The Chinese are also worried about the fallout of the pandemic on the manufacturing units of overseas companies located in China. Several countries, most notably Japan, have already instructed their firms to move out of China. India, along with several other Asian nations, offers a good platform for the relocation of manufacturing facilities for firms moving out of China. Hence, the Chinese would want to invest in Indian companies to ensure that if not in China, they continue making goods for firms all over the world in India. But India has its own concerns, mainly for security in sensitive sectors, and cannot allow unrestricted investments from China.