Change in FDI norms to ‘screen’ investments: Govt

Tribune News Service

New Delhi, April 20

The government today defended the change in FDI norms that primarily target by claiming they only serve as a “screen” and do not prevent greenfield and top-up investments from taking place.

Startups and other firms looking for investment from China are also perturbed over the government changing the FDI norms to prevent “opportunistic takeovers”, a week after a Chinese bank increased its stakes in HDFC Bank.

The Department for Promotion of Industry and Internal Trade had on Saturday revised its foreign investment policy, making it difficult for firms from countries sharing land border with India, including China, to invest in the country.

However, sources said the change did not mean a stop to investment and pointed out that the intention was to block predatory investments from cash-rich Chinese entities in Indian firms that have been badly hit by the Covid epidemic and are potential takeover targets.

The Chinese embassy here reminded India that investment from China had driven the development of India’s industries, such as mobile phone, household electrical appliances and automobile, creating a number of jobs in India.

Some of these companies actively made donations to help India fight epidemic.

China said the additional barriers set by India for investors from specific countries violate WTO’s principle of non-discrimination and also do not conform to the consensus of G20 leaders and trade ministers for a non-discriminatory and stable trade and investment environment. The move will also compel Indian diplomats in China to do a volte face.

Unicorns concerned

Over 70 per cent of India’s unicorns (a startup company valued at over $1 billion) such as Ola, Swiggy, Zomato, BigBasket, Paytm and OYO Rooms backed by Chinese investors, fear that the pace of top-up investments from China will become slow at a time when infusions are quickly required