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

Published 04/18/2020, 09:08 AM
Updated 04/18/2020, 09:10 AM
© 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

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.

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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.

Latest comments

India grow like their train. China start late than India, now everyone wow about China bullet train
They just waiting the business suffer and bankrupt. Nothing much can do
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
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.
Pajeet needs to loosen up.
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
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. :)
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.
 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.
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.
China has enough of food to citizen. The neighbor same size country citizen everyday stand for Hungry
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-
pull out the investment and invest in other countries. easy...
Agreed. I will be reading the label and purchasing items that DON'T say made in CCP
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.
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.
 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.
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.
 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.
very good choice it should made a permanent tool
This is nothing new for China. They've been buying companies in the U.S. for years and thereby owning intellectual property.
They want control the country not buying IP since india has almost none.
well done, China's long term manipulation harmed the world market for decades, which is unfit to be in WTO
too late.. but still a good move
not too late -almost anything can be undone- look at previous administration -
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