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News,Article,Findoc | September 30
Right move to protect interest of Indian firms through FDI restrictions

Source- Taxguru.in


Right move to protect interest of Indian firms and their stakeholders through FDI restrictions by GoI

The constantly increasing Covid-19 pandemic has cast a shadow on the Indian and as well as global economy, which was already reeling under pressure by the US-China trade war.

This shock comes at a particularly unfortunate time for India, as the economy was already on a downtrend since the turn of FY 2018-19. More specifically, on a quarterly basis, India’s growth rate fell from around 8 per cent in Q4 FY18 to a new low of 4.5 per cent in Q2 FY20 hurting the prospects of Indian companies and start-ups, which were facing difficulties in raising funds. This situation added with the COVID-19 pandemic may provoke Indian companies to decide on the distress sale of their companies.

Government announced through Ministry of Commerce & Industry, Department for Promotion of Industry and Internal Trade has revised Foreign Direct Investment (FDI) policy vide Press Note No. 3 (2020 Series) wherein it has reviewed and revised FDI policy for curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic and and amended para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017.