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


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.