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‘China, others should have no concerns about changes in FDI rules’: Govt
China had on Monday asked India to revise what it described as a “discriminatory” change in FDI regulations aimed at preventing opportunistic takeovers of Indian firms amid the economic downturn triggered by the Covid-19 pandemic.
China and other countries shouldn’t have concerns about changes to India’s foreign direct investment (FDI) rules to bar opportunistic takeovers as they don’t impose a blanket ban on investments from any neighbouring nation, people familiar with developments said on Thursday.
China had on Monday asked India to revise what it described as a “discriminatory” change in FDI regulations aimed at preventing opportunistic takeovers of Indian firms amid the economic downturn triggered by the Covid-19 pandemic.
The Indian government brought China under the ambit of regulations preventing such acquisitions last week, with authorities saying Chinese investments would require the government’s approval. The revision of the policy came soon after China’s central bank bought a 1.01% stake in HDFC.
“There should be no concern regarding the procedural changes made as a result of a review of the FDI policy as they don’t prohibit investments from any country that shares a land border with India,” one of the people cited above said on condition of anonymity.
The change only envisages that FDI proposals from countries sharing a border with India will be considered under the government approval route, and several other countries have taken similar steps, the people said.
The change in Indian FDI regulations came against the backdrop of reports that Chinese firms were eyeing the acquisition of Indian companies hit by a fall in their valuation amid the economic slowdown.
In a statement issued on Monday, the Chinese embassy contended the changes in FDI norms were tantamount to additional barriers for “investors from specific countries” and violated the WTO’s “principle of non-discrimination”. The statement added the changes also went against the trend of liberalisation and facilitation of investment.
The people cited above also referred to the effectiveness of Coronavirus testing kits sourced from China, especially against the backdrop of complaints from several states, and said the Indian Council of Medical Research (ICMR) is looking into the matter.
The ICMR advised states to stop using Chinese-made rapid testing kits after wide variations – ranging from 6% to 71% – were detected in the accuracy of test results for positive samples. Officials said there was a need to carry out further investigations of these huge variations.
Chinese authorities, on the other hand, have been insisting that India should only procure testing kits and other medical equipment from firms that have been certified for exports. The certification process was tightened after several other countries complained about the quality of Chinese testing kits and other medical equipment.
