New Delhi: The MNRE (Ministry of New and Renewable Energy) has set up an FDI cell within the ministry to process proposals of foreign acquisitions in domestic firms, an official notification said. Amitesh Kumar Sinha, Joint Secretary at MNRE, and Ruchin Gupta, director at MNRE, are members of the newly-formed FDI cell, the notification said. The government had recently reviewed the FDI policy for curbing opportunistic takeovers and acquisitions of Indian companies due to the current COVID-19 pandemic.
It was done because of the fears that Chinese companies may acquire stakes in strategically important companies at a time when stock prices are volatile as happened in the case of HDFC. In April, China's central bank had increased its stake in HDFC, India's largest mortgage lender.
Following the April episode, the DPIIT (Department for Promotion of Industry and Internal Trade), in its revised policy, had said that an entity of a country that shares 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. China, Bangladesh, Bhutan, Myanmar, Pakistan, Nepal, and Afghanistan are the countries that share land border with India.
The DPIIT had also added that FDI proposals involving such investments from these countries should be processed by the concerned ministry or department. Several other countries across the globe, including Australia, Germany, among others, have brought in legislation to prevent takeovers by Chinese firms in the wake of the Coronavirus pandemic.