India Reviews FDI Policy, Government Route Must

Made in China Over 50k PPEs Junked by India After They Failed Quality Test Came as Donations

Made in China Over 50k PPEs Junked by India After They Failed Quality Test Came as Donations

Days after a Chinese Bank picked up shares of HDFC, India's second largest private bank at rock bottom rates, the government on Saturday amended the foreign direct investment (FDI) policy to avert a similar predatory approach in future.

The new norms state that an entity of a country sharing land border with India can invest only under the Government route.

For Pakistan based owners, citizens or entities investment could be made only under the Government route in sectors other than defence, space, atomic energy and other notified sectors prohibited for foreign investment. While India shares a land border with Pakistan, Bangladesh, Myanmar, Nepal, Bhutan, China and Afghanistan, the move appears directed mostly at China.

India put curbs on investments in its companies from neighboring nations including China, seeking to cut the risk of opportunistic takeovers as the coronavirus outbreak drives down valuations. Also, Chinese firms who want to exit their existing investments from Indian firms will now have to require the government's approval.

"The central government has placed orders of about two lakh PPE kits from Singapore, which are expected to arrive in India soon", sources informed. Such is their pace that over the last few years, 18 out of India's 30 fastest growing companies have been Chinese-funded.

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"The intention of the government is clear in wanting to evaluate Chinese investments on a case to case basis".

India received $2.34 billion (Rs 14.846 crore) worth FDI from China between April 2000 and December 2019. There are nine sectors where FDI is prohibited and that includes lottery business, gambling and betting, chit funds, Nidhi company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.

"This builds on a foundation of almost $2.8 billion in total assistance, which includes more than $1.4 billion in health assistance, the United States has provided to India over the last 20 years", it said in a update of the U.S. efforts in response to the COVID-19 pandemic.

It is possible that the recent open market purchase of a small amount of shares of HDFC by People's Bank of China may have stoked existing fears, although both HDFC and market experts said that those concerns are overplayed.

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