Amid the coronavirus crisis, the government has brought a significant amendment in its Foreign Direct Investment (FDI) regulations on Saturday, which could be a direct attack to its neighbour China on the economic front.

According to a press note by the Ministry of Commerce and Industry, any country that shares border with India has to approach the government for investing and not go via the automatic route.

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“The Government of India has reviewed the extant Foreign Direct Investment (FDI) policy for curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic,” it said.

Until before the new arrangement has been made in the policy, the curb on FDI was only on Pakistan and Bangladesh as a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

With the amendment, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route.

This change has brought China in the ambit of ‘government permission’ before investing in any sector in the country.

Also, if the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction/purview subsequent change in beneficial ownership will also require government approval.

There are two modes on Foreign Direct Investment in India. Either an investor can take the automatic route, which does not require government approval, and the second is through government route, for which companies need a go-ahead from the centre.

China has been under the radar of various countries after the spread of coronavirus pandemic. Almost every country has been in the grip of the deadly virus resulting in the slowdown of trade and business.