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In an attempt to curb opportunistic takeovers and acquisitions of Indian companies during the COVID-19 pandemic, the Government of India has reviewed the country’s Foreign Direct Investment (FDI) policy on 17 April 2020.
Similarly, the government has also made it clear in case of change of ownership of any FDI to any entity from a country sharing border with India, permission will have to be sought from the government. This will apply to all existing and future investments, either direct or indirect.
China taking over several vulnerable companies across the world, during the financial crisis developed during the spread of COVID-19 has been a worry for several countries.
For India, the People's Bank of China increasing its stake in Housing Development Finance Corp Ltd is said to be one of the immediate triggers for this decision. As per a filing on 11 April, the People's Bank of China’s share in HDFC had increased from 0.8% to 1.01%.
On Saturday, former Congress President Rahul Gandhi took to Twitter to thank the government for “taking note of [his] warning” and amending the FDI norms.
On 12 April, Gandhi had asked the Modi government to ensure steps are taken to prevent the hostile takeovers of Indian companies by foreign entities during the COVID-19 pandemic.
“The massive economic slowdown has weakened many Indian corporates making them attractive targets for takeovers. The government must not allow foreign interests to take control of any Indian corporate at this time of national crisis,” he had tweeted.
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