COVID-19 Crisis: Revised FDI norms for neighbouring countries

Like many other countries, India is also trying to curtail opportunistic take-overs due to massive economic slowdown, falling share price/ valuation due to Covid19 pandemic. 

The Department for Promotion of Industry and Internal Trade, issued a Press Note on 17 April 2020 which states that entities based in countries which share land border with India (our land connected neighbours include China, Nepal, Myanmar, Bhutan, Afghanistan, Pakistan and Bangaldesh)  will have to seek prior approval from the Government before investing in India, instead of taking the automatic route. Such a regulatory condition is already applicable to investments from Pakistan and Bangladesh.  The Press Note was followed by a gazette notification dated 22 April 2020 by the Ministry of Finance which notified the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2020. 

In the Press Note or the Notification, the definition of Beneficial Ownership is not provided. This slide aims to provide the interpretations of Beneficial Ownership under various statutes. 


It is necessary that a clarification is required to be issued by the regulators. For now, the bankers are going with the definition of Beneficial Ownership under the Prevention of Money Laundering Act. However, the Companies Act has a more rigorous threshold.


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