Latest Amendment in Indian FDI Policy to curb opportunistic takeovers / acquisitions of Indian Companies from certain jurisdictions

Altug GuzeldereManaging Partner, Guzeldere & Balkan Law Firm

With the growing number of Covid-19 cases worldwide, many countries are now facing severe economic downturn. The uncertainty around uptake in the business cycle has made many companies (across the globe) as potential targets for acquisition by overseas MNCs. This has led Governments of various countries to enter into a protectionist mode by making suitable changes in respective FDI policies.

In a similar move, India has recently amended its FDI policy for curbing opportunistic takeovers / acquisitions of Indian companies which might be lucrative targets as a result of the novel coronavirus outbreak.

The new amendment requires certain investments to come in India through the government approval route only so that the same can be monitored and controlled. As per the amendment, an entity belonging to a country which shares land border with India viz. Afghanistan, Bhutan, Bangladesh, China, Myanmar, Nepal and Pakistan, can invest only under the Government route irrespective of the sector / activity in which investment is being proposed to be done. In case where the beneficial owner of investment is situated in or is a citizen of any of these countries, the same provision shall apply i.e. prior Government approval shall be required. Further, transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the hands of individuals / entities belonging to countries as aforesaid, shall also require government approval.

Please feel free to reach us for any further clarification in this regard or for seeking government approval for any investments in India.