Neighbours and Fences – India tweaks its foreign investment law

Impact of COVID 19 on the Indian Foreign Direct Investment and government measures taken to protect small enterprises from the economic instability and intervention by the Chinese


If nothing else, the last few months have taught the world that the Coronavirus pandemic is more than a serious health hazard.  It is also the spur to a business disruption on an unprecedented scale. It has swiftly impacted every sphere of business and trade in India: the declining revenues and the crippling capital crunch have been most keenly felt by businesses across the board, and some of these businesses, more than others, have become an easy target for takeovers by foreign companies at less than optimal pricing, especially where distressed assets are involved. Alert to this imminent danger for Indian businesses, the Government of India vide Press Note 3 of 2020, on April 17, 2020, amended the extant law on foreign investment to prevent any opportunistic takeovers and acquisitions of Indian companies during the COVID-19 pandemic. The Press Note was introduced shortly after China’s central bank bought close to 1% stake in HDFC Bank after the Bank’s stocks crashed in the aftermath of the pandemic, rousing the Government to the urgency for immediate measures to protect vulnerable businesses as part of its larger design for a return to economic stability.  

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Article by Mary Julie John and Rangam Sharma