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India toughens rules on investments from neighbours, seen aimed at China

Stock Markets Apr 18, 2020 09:10AM ET
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© Reuters. FILE PHOTO: Students wear masks of China's President Xi Jinping as other waves national flags of India and China, ahead of the informal summit with India’s Prime Minister Narendra Modi, at a school in Chennai
 
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By Aditya Kalra and Aftab Ahmed

NEW DELHI (Reuters) - India has stepped up scrutiny of investments from companies based in neighbouring countries, in what is widely seen as a move to stave off takeovers by Chinese firms during the coronavirus outbreak.

India's trade ministry said in a notification dated April 17 the changes to federal rules on investment were meant to curb "opportunistic takeovers/acquisitions". It did not mention China.

Investments from an entity in a country that shares a land border with India will require government approval, it said, meaning they can not go through a so-called automatic route.

"These times should not be used by other countries to take over our companies," a senior government official told Reuters.

Similar restrictions are already in place for Bangladesh and Pakistan. But up to now, they have not applied to China and India's other neighbours including Bhutan, Afghanistan, Myanmar and Nepal.

"This will certainly impact sentiment among Chinese investors. However, greenfield investments will not be impacted," said Santosh Pai, a partner at Indian law firm Link Legal that advises several Chinese companies.

Australia has also said all foreign investment proposals will be assessed by a review board during the coronavirus crisis to prevent a fire sale of distressed corporate assets. Germany has taken similar measures.

A February report by research group Gateway House said Chinese foreign direct investment into India stood at $6.2 billion.

China's Bytedance has plans to invest $1 billion in Indian, while automakers including Great Wall Motor Co Ltd (SS:601633) and MG Motor, a unit of China's SAIC (SS:600104), have said they intend to invest millions.

Delano Furtado, a partner with law firm Trilegal, said the notification may also impact Chinese companies with existing investments in the country.

"Any follow-on investments in those entities may now require approvals," he said.

India's notification also said government approval would also be needed to change the ownership of an Indian entity that had existing foreign investment.

India toughens rules on investments from neighbours, seen aimed at China
 

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Comments (13)
Bill Chan
Bill Chan Apr 19, 2020 12:13PM ET
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India grow like their train. China start late than India, now everyone wow about China bullet train
Bill Chan
Bill Chan Apr 19, 2020 12:13PM ET
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They just waiting the business suffer and bankrupt. Nothing much can do
Get Sirius
Get Sirius Apr 18, 2020 3:15PM ET
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If this is China fault will we all be sble to sue China because virus is destroying my business? On the other hand I can not sue Trump&co because they steal me money from stock coz of manipulation. So I guess I will get nothing from China and and nothing from WS
Ravi Verma
Ravi Verma Apr 18, 2020 1:46PM ET
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Every Country have rights to protect Nation interest, in these economy downturn if others are buying asset on sale clearly indicate their intent. When norms were relaxed they didn't think about investment.
Johnson Gray
Johnson Gray Apr 18, 2020 1:18PM ET
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Pajeet needs to loosen up.
Meetesh Dwivedi
Meetesh Dwivedi Apr 18, 2020 11:41AM ET
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China spreading fears and hiding information has lead to wide spread pandemic and in these times no body wants investment on the blood of people's life
Ed Crain
Ed Crain Apr 18, 2020 11:41AM ET
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And yet, here we are taking advantage of stocks that are at a major discount due to Covid-19. Prices so low, you'd think they were being sold at Walmart. Btw, NYSE:WMT closed at 132. Up from 117 last October. :)
David David
David9 Apr 18, 2020 11:30AM ET
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Unfortunately for you haters out there, China has 1.4B consumers. What that means is, when China farts, you all will smell it even if you want to avoid. That is how powerful the second biggest economy, fast becoming the number one soon, will be going forward and no one can stop this. Might as well get use to smelling cause China will be farting into the future.
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Chris Martin
Chris Martin Apr 18, 2020 11:30AM ET
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Ed Crain parts from the US Playbook didn't include theft, intellectual property theft, *** oppression of people, deceit to all other nations so maybe some of the green Factor but none of that other ******
David David
David9 Apr 18, 2020 11:30AM ET
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Stealing intellectual property? It is more like China bought it. Do you really think China would give us their 1.4B labor for free in the first place? It is our US greed companies going there without force, partnered with China to use cheap labor for major profits. Without doing this, do you really think we would have the 1% owning 90% of the wealth?
Ed Crain
Ed Crain Apr 18, 2020 11:30AM ET
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Chris Martin  Actually, the current US administration seems to have a distaste for Canada, its closest ally. As a Canadian, I take that personally. We were there for the US during the Cold War and 9-11, taking in Americans in Canada when all aircraft were grounded. Now that the US has befriended Russia, the current US administration has cast Canadians aside. And this is just one example. I could go on about the US administration blocking 500,000 N95 masks at our border from 3M USA, as well, saying it was for national security. Then to see a report from Fox News' Geraldo Rivera complaining about China blocking a 3M China shipment of N95 masks destined for  the US for China's national security, complaining that China couldn't do that. So, who in this scenario is being deceitful? China for blocking N95 masks to the US, or the US blocking N95 masks to Canada? I say both.
David David
David9 Apr 18, 2020 11:30AM ET
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China has been sending millions of masks and medical equipments to US, but our Cowboy image is too tuff to even said infront of the media, a thank you China for the help. Instead, we complained that China sent us defective masks. Then China stepped up their inspection to insure quality, so slowed down the shipments, then now US complaints in the backend to China, please send us masks, hurry up, we need them. We can't have it both ways.
Bill Chan
Bill Chan Apr 18, 2020 11:30AM ET
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China has enough of food to citizen. The neighbor same size country citizen everyday stand for Hungry
Chris Martin
Chris Martin Apr 18, 2020 11:07AM ET
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WTHeck is that ??? The into. picture-Did CCP suceed in cloning? That's a whole lot of faces that SHOULD be covered with masks!Makes me a little sick Xi is passing out Halloween masks-
Chong Wee Jye
Chong Wee Jye Apr 18, 2020 11:00AM ET
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pull out the investment and invest in other countries. easy...
Chris Martin
Chris Martin Apr 18, 2020 11:00AM ET
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Agreed. I will be reading the label and purchasing items that DON'T say made in CCP
David David
David9 Apr 18, 2020 11:00AM ET
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Lol...please to and you will soon discover 99% will show made in China. You should then learn to become a minimalist so you can get by on very little.
TeaMaker Tex
TeaMaker Tex Apr 18, 2020 10:51AM ET
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China needs to be put back behind the iron curtain but that will mean Wall Street will have to pull out. Ain't gonna happen though. Money is way too important to USA. WS billionaires are too ego driven.
Chris Martin
Chris Martin Apr 18, 2020 10:51AM ET
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Businesses are started through innovation. I'm telling you everyone should advertise products they sell with thre extra measure of including a line of products NOT made in CCP. I'd purchase and if the was a company or individual that could get an ad on TV indicating THAT is what they will provide, we shall see.
Ed Crain
Ed Crain Apr 18, 2020 10:51AM ET
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Chris Martin  While your intentions are good, few follow. That's why Walmart, created by an American, is so rich selling products made in China and Southeast Asia. Btw, Walmart closed at 132. Up from 117 in October 2019.
Chris Martin
Chris Martin Apr 18, 2020 10:51AM ET
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and I am aware! There is huge greed everywhere all over the world! India is very Thrifty to but they're not murderers! Is a big difference in just hooking economic factors when you will sell body parts in a harvesting manner but I dig what you're saying.
Ed Crain
Ed Crain Apr 18, 2020 10:51AM ET
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Chris Martin  Just an FYI, more Americans are killed by fellow Americans per year than any active war. 5 murders/100,000 people. In 2015, 10 American troops were killed; nine were killed in 2016; and 11 in 2017. In 2018 so far, 12 American soldiers have died in combat in Afghanistan along with four other coalition soldiers.
Dietmar Stahl
Dietmar Stahl Apr 18, 2020 10:10AM ET
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very good choice it should made a permanent tool
 
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