Govt amends FDI policy to curb opportunistic acquisitions

The Indian government has taken steps to prevent opportunistic takeovers or acquisitions of Indian companies, resulting from the current COVID-19 pandemic, by reviewing the existing Foreign Direct Investment (FDI) policy.

April 18, 2020

The Department for Promotion of Industry and Internal Trade (DPIIT) issued a press note clarifying the amended section of the FDI policy

The revised policy ensures foreign investors follow appropriate Government channels and are unable to take advantage of weak market conditions

Government is allowing select business activities to resume, provided they are not COVID-19 hotspots and adequate safety measures are taken

The Government of India has also announced a US$22.5 billion relief package to support most vulnerable in the crisis

The Government of India has taken steps to prevent opportunistic takeovers or acquisitions of Indian companies amid market weaknesses owing to the COVID-19 pandemic. The Government has reviewed the existing Foreign Direct Investment (FDI) policy. On April 18, the Department for Promotion of Industry and Internal Trade (DPIIT) issued a press note clarifying how non-resident entities can invest in India, highlighting the amended section of the FDI Policy. The revised position now ensures that any beneficiary of investment into India follows the appropriate Government channels for approval, and protects various sectors and activities against foreign investors taking advantage of current market conditions during this crisis.

India has been under lockdown since March 25, with indications that it will extend till May 3, to help prevent the spread of the novel Coronavirus disease. However, certain mainstream business activities will be allowed to resume on April 20 in areas which are not COVID-19 hotspots, provided they take adequate safety measures. In efforts to support business continuity in the country, the Government is enforcing safety measures, such as companies restricting the workforce to only 40-50 per cent of employees, ensuring extended lunch breaks, and other encouraging precautions.

Additionally, the Government is taking various measures to ensure that businesses do not suffer long-term consequences of the pandemic and subsequent lockdown. For instance, the Directorate General of Foreign Trade (DGFT) has launched a help desk to assist with any COVID-19 related export and import issue. The Government has also announced a US$22.5 billion relief plan to help the most vulnerable sections of the society ride out the crisis, while the newly established Invest India Business Immunity Platform provides entrepreneurs and businesses with access to the latest developments and information.