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Finance Minister notified changes in FDI Policy under the Foreign Exchange Management Act (FEMA) Law

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The finance minister of India Nirmala Sitharaman notified some of the changes in the foreign direct investment policy 2020 under FEMA.

The finance minister Nirmala Sitharaman on Wednesday notified some changes in the foreign direct investment (FDI) policy rules. These rules include some mandatory prior approval from the government of India for foreign direct investments ( FDI), for the neighboring countries who share their geographical boundaries with India. It was undertaken by the Indian finance ministry for the prevention of opportunistic takeover of domestic markets amid Coronavirus pandemic under the Foreign Exchange Management Act (FEMA) Law.

The countries which share their geographical boundaries with India are China, Pakistan, Nepal, Bhutan, Bangladesh, Myanmar, and Afghanistan. Under the Foreign Exchange Management Act 1999, The finance ministry informed some amendments to the FDI Policy 2020.

Finance Minister notified changes in FDI Policy under the Foreign Exchange Management Act
FDI POLICY

India’s Finance Ministry made these amendments as the power to make such kinds of amendment given in the clause(aa) and clause(ab) of the subsection 46 of the Foreign Exchange Management Act (FEMA), 1999. The government Amended the FDI Policy to curb the opportunistic takeovers/ Acquisitions in Domestic markets of India during the Coronavirus outbreak.

Currently, these were such norms for investments coming from Pakistan. A company can have an investment in India with respect to the amendments of FDI Policy, except in prohibited sectors. The prohibited sectors as declared under the Foreign Exchange Management Act (FEMA) are lottery Businesses, gambling, and betting, chit funds, Nidhi invest, real estate investment, manufacturing of cigars, cigarillos, cheroots, and cigarettes using tobacco substances.

Finance Minister notified changes in FDI Policy under the Foreign Exchange Management Act
foreign direct investment fdi

FDI is also Allowed in special investment sectors like Defence, Media, Telecoms, Pharmaceuticals, and insurance where special approval is required for foreign investment from Government.

These proposed amendments in the Foreign Direct Investment (FDI) policy 2020 under Foreign Exchange Management Act ( FEMA) Law, might save Indian firms and it’s entire economy to sustain itself more efficiently and effectively by the end of, Coronavirus pandemic situation. There are no geographical restrictions imposed rather than, it is sectoral restrictions in investment activities that would be very helpful to have fruitful Foreign Direct Investment (FDI).

Due to the Coronavirus outbreak all over the world, all countries are going through their worst economic phase. This gave their governmental agencies an opportunity to protect themselves by grabbing the opportunity of hostile takeovers and mergers with cash-rich economics. In this respect, a Various governments and regional organizations end up with different strategies to protect themselves by grabbing such opportunities. As said by the European Union, Germany, France, and other cash-rich economies, having amendments in their Foreign Direct Investment (FDI) norms to grab the opportunities of growth and developments by the post-COVID-19.

Finance Minister notified changes in FDI Policy under the Foreign Exchange Management Act
Fdi

New provisions in Foreign Direct Investment (FDI) Policy

On 18th April 2020, In India, the Department for Promotion of Industry and Internal Trade (DPIT) issued notifications and made so many amendments to India’s Foreign Direct Investment (FDI) Policy 2020. These Amendments have new provisions related to the norms of doing business with their neighboring countries. The main reason being is to block China, it’s operations, and markets with India. This message prevailed all over the world that led to the statement issued by China’s Embassy saying that this is a violation of The World Trade Organisation’s Norms. Added by Ji Rong, Chinese Embassy’s Spokesperson, that ” The additional barriers/ amendments(Especially for investors from specific countries) in Foreign Direct Investment (FDI) Policy are not in respect of World Trade Organisation WTO’s principles of non-discrimination and liberalization and facilitation of trade and investment’

#Amendement in FDI Policy 2020

#Block China

#COVID-19

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