Shortly after the government amended foreign direct investment (FDI) norms for companies based in neighbouring countries, Congress leader Rahul Gandhi tweeted in appreciation and said: “I thank the government for taking note of my warning and amending FDI norms”. In a subtle swipe at the government Mr Gandhi pointed to his April 12 post that warned of the possible takeover of Indian companies “weakened by the massive economic slowdown”.
In a press note released earlier today the Commerce and Industry Minister said foreign companies looking to invest in the country must now approach the government if they are based in a nation that shares borders with India.
The revised FDI rule seeks to curb “rhttps://www.ndtv.com/india-news/coronavirus-amid-pandemic-india-revises-fdi-policy-to-shield-firms-from-neighbours-2214082?pfrom=home-topscroll due to the COVID-19 pandemic”, the ministry said.
“I thank the government for taking note of my warning and amending FDI norms to make it mandatory for government approval in some specific cases,” Rahul Gandhi tweeted in response.
On April 12 Mr Gandhi wrote: “The massive economic slowdown has weakened many Indian corporates making them attractive targets for takeovers. The Govt must not allow foreign interests to take control of any Indian corporate at this time of national crisis”.
FDI in India is allowed under two modes – automatic (companies don’t need government approval) or via the government (companies need a go-ahead from the centre).
As per the earlier policy, companies from Bangladesh and Pakistan were required to take the government route. The rule has now been revised to include companies from China.
Rahul Gandhi’s warning regarding FDI at this time of crisis came on a day when the People’s Bank of China purchased a 1.01 per cent stake in mortgage lending major Housing Development Finance Corporation (HDFC).
However, the centre’s revised FDI rules exempts the above purchase, sources said, as the deal was less than the benchmark of 10 per cent.
Amid the uncertainty caused by the novel coronavirus outbreak in the country, concerns have been raised over the economy; this week the International Monetary Fund (IMF) projected India’s growth rate at 1.9 per cent for 2020.
The lockdown imposed by Prime Minister Narendra Modi last month – and extended to May 3 last week – to break the chain of transmission of the COVID-19 virus has shut down several industries, leaving lakhs unemployed.
The manufacturing sector that was already under stress has been hit hard, as have banking and aviation. The latter sector is perilously close to bankruptcy, according to CAPA (Centre for Asia Pacific Aviation) and imperils 20 lakh jobs.
Last week, while extending the lockdown, PM Modi acknowledged the pressure on the economy and said restrictions would be eased for some industries and sectors after April 20. A revised list of these sectors and industries (only those located in non-containment zones) was released today.