Amendment in FDI Policy – Foreign Entities Of Neighbouring Countries Now Require Government Approval Before Investing in India
The Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India (DPIIT) has amended the present Foreign Direct Investment (FDI) Policy 2017 to discourage opportunistic investment in Indian Companies by neighboring countries in the midst of Coronavirus pandemic.
These amendments have been notified vide a Press Note issued by DPIIT on the 17th day of April 2020 amending the present Para 3.1.1 of the extant FDI Policy 2017.
The amendments specified in the said press note are enumerated as under:
- An entity of a country, which shares a land border with India, can invest only under the Government route i.e. with the prior approval of the Government, except in those sectors/activities which are already prohibited for FDI;
- If the beneficial owner of investment into India is situated in the countries that share a land border with India or is a citizen of any such country, such beneficial owner can invest only under the Government route i.e. with the prior approval of the Government, except in those sectors/activities which are already prohibited for FDI investment;
- Transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, which may result into change in ownership in favor of an entity or person falling within the restriction/purview of the para 1 and 2, such subsequent change in beneficial ownership will also require Government approval.