The Department for Promotion of Industry and Internal Trade (DIPPT) under the supervision of Ministry of Commerce & Industry (MCI) issued the Press Note. 3 (2020) reviewing the Foreign Direct Investment (“FDI”) policy with the aim to curb opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic. During the current lockdown period, it has been observed in the media and news articles, that the neighboring countries of India are investing in the stake of various Indian Companies such as China’s central bank recently raised a stake in the Housing Finance Development Corporation (HDFC) to a little over 1 percent. Therefore, in order to regulate such acquisitions and keep a check, the Government has reviewed the extant FDI policy in order to curb the opportunistic takeovers/acquisitions of Indian companies due to the current pandemic.
The amendment will bring the investment by neighboring countries in Indian Companies under the Government route, to ensure that the Indian Companies are not handed over through takeover/acquisition route to the companies situated in the neighboring countries including Pakistan, Bangladesh, and China.
The economic development of India has witnessed a significant boom and by infusion of foreign direct investments from all across the
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