GOI Revise FDI Law after China’s Investment in HDFC Limited, All You Need to Know

Posted by Sarkari Result May 06, 2020 07:59 IST

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Recent News: The government of India recently announced the revised laws for foreign investment in India for its neighborhood countries. As you know recently the People’s Bank of China acquired a 1 percent stake in HDFC Ltd. Due to the Coronavirus pandemic, the stock market has been down and its impact badly on developing countries markets like India. Due to which foreign investors, as well as other domestic businessmen, prefer to buy the share at a low price.

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Department of Industry and Internal Trade Promotion

According to the Department of Industry and Internal Trade Promotion (DPIIT) to protect India’s sovereignty, the government has revised the laws for neighboring countries of India, if these countries want to invest in India, they will need government approval.

As mention in Press Note No. 3(2020 Series) released by DPIIT the Present Situation is

  • A non-resident entity can invest in India under FDI policy excluding those sectors/activities which are prohibited. However, a citizen of Bangladesh or an entity incorporated in Bangladesh can only invest under the government route.
  • In addition, a citizen of Pakistan or an entity incorporated in Pakistan may invest in sectors/activities other than defense, space, nuclear power and sectors/activities prohibited for foreign investment, only under the government route.

Revised Situation

  • (A) A non-resident entity can invest in India under FDI policy except those areas/activities which are prohibited. However, a unit of a country, which shares land borders with India or where it is the beneficial owner of investment in India or is a citizen of any such country, can invest only under the government route.In addition, a citizen of Pakistan or an entity incorporated in Pakistan may invest in sectors/activities other than defense, space, nuclear power and sectors/activities prohibited for foreign investment, only under the government route.
  • (b) In the event of a transfer of ownership of any existing or future foreign direct investment directly or indirectly to an entity in India, resulting in beneficial ownership within the restriction/scope of paragraph (a), after such A beneficial change in ownership will also require government approval.

Implementation

  • The above decision will take effect from the date of the Foreign Exchange Management Act (
    FEMA) notification.

Official Notificationhttps://dipp.gov.in/sites/default/files/pn3_2020.pdf

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