As a measure to protect Indian companies against opportunistic acquisitions, the Centre recently revised its FDI policy, which now requires all investments from neighbouring countries, including China, to be approved by the government.
Think tank Gateway House conducted a research on China’s investments in India, and The Quint’s Editorial Director Sanjay Pugalia spoke to the report’s author Amit Bhandari about these investments and the impact of the policy change. As China has investments worth billions of dollars in India, the move helps the Centre regulate these investments in future.
“This decision comes days after it was noticed that People’s Bank of China acquired 1% stake in HDFC. Similarly, Chinese stakeholders have bought huge shares in tech start-ups in our country, including Ola, PayTM among others. These companies will go on to become what Google and Facebook are today and hence a stake in them from the very beginning would pave the way for an easy takeover in the future,” Bhandari said.
Why The Change In Policy Matters Now
While the country and the economy tries to fight against the coronavirus pandemic, the Sensex and Nifty have hit all-time lows. Explaining about the need of policy change at this hour, Bhandari says, “These situations are perfect for companies to come in and takeover businesses that are suffering losses because of the fall in our market. The move by the Centre is basically aimed at protecting our Unicorn companies from getting run over by other powerful ones.”
Video Editor: Mohd Ibrahim
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