China says new FDI norms violate WTO; officials say others put firewalls too

Indian Express
Dated: April 21, 2020
By: Shubhajit Roy, Prabha Raghavan
Two days after the government tweaked its FDI policy to make its approval mandatory for firms in neighbouring countries to invest in Indian companies, China claimed Monday that this violates the WTO’s “principle of non-discrimination”. And hoped that India will “revise” its decision.
The government’s move is seen as aimed at checking “opportunistic takeovers” of Indian firms hit by the ongoing Covid outbreak and lockdown.
New Delhi maintains the policy is not aimed at any one country but spokesperson for the Chinese Embassy in India Ji Rong made it clear its echo in Beijing.
“The impact of the policy on Chinese investors is clear. Chinese investment has driven the development of India’s industries, such as mobile phone, household electrical appliances, infrastructure and automobile, creating a large number of jobs in India.Chinese enterprises actively made donations to help India fight COVID-19 epidemic,” Ji said.
China’s FDI has grown five-fold since 2014 and, as of December 2019, its cumulative investment in India has exceeded $8 billion. A Brookings India paper pegs the total current and planned Chinese investment in India as being over $26 billion.
Ji’s reference to job creation and donations to India — in terms of testing kits, masks and protective gear – is meant to underline Beijing’s contribution to Indian economy and its fight against the pandemic.
She said that the outbreak should make countries work together to bring their economies back on track. “(But) the additional barriers set by Indian side for investors from specific countries violate WTO’s principle of non-discrimination, and go against the general trend of liberalization and facilitation of trade and investment,” Ji said.
She added that New Delhi’s decision isn’t in tune with “the consensus of G20 leaders and trade ministers to.keep our markets open”.
According to the amendments to India’s consolidated FDI Policy, 2017, while non-resident entities can continue to invest in India, except in prohibited sectors or activities, firms in neighbouring countries will have to seek approval.
“.an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route,” stated the press note issued by the Department for Promotion of Industry and Internal Trade (DPIIT).
This came days after China’s central bank, the People’s Bank of China (PBoC), raised its shareholding in Housing Development Finance Corporation (HDFC) to over one per cent during the recent stock market slump.
HDFC vice chairman and CEO Keki Mistry had said that PBoC had been an existing shareholder, owning 0.8 per cent in the firm as of March 2019.
Restrictions on investments by citizens of or entities incorporated in Pakistan continue in the amended notification.
“The amendments are not prohibiting investments. (We have) just changed the approval route for these investments. There are many sectors in India that are already subject to this approval route,” a senior government official told The Indian Express. “Many other countries are also doing this.”
Over the last two months, countries like Germany, Australia and Spain have tightened their foreign investment policies to prevent hostile takeovers by overseas investors.
“We have seen steps being taken by other jurisdictions to prevent purchase of domestic entities at cheaper valuations. In this regard, the European Union has issued guidelines to ensure key EU assets are protected,” said Khaitan & Co Partner Atul Pandey.
“Italy has also restricted investment in sensitive areas. The US already has an inter-agency committee responsible for reviewing foreign acquisitions.India has just followed suit, in line with actions being taken globally,” Pandey said.
But, unlike in other cases, the new norms do not apply to all countries but just those which share borders with India. “There will now be different sets of procedures for the same set of investments based on which country the company is investing from. This is where the potential issue of discrimination may be raised by critics of the new norms,” said a trade expert.

Comments

Post a Comment

Popular posts from this blog

India Joins Russia in Voting Against West-Backed Move to Expand Powers of OPCW

The Wire: June 28, 2018 New Delhi: India voted against a UK-backed move that will allow the global chemical weapons watchdog to apportion blame for illegal attacks, criticising the decision to grant “unchecked powers” to the head of the group which could be used for “partisan” purposes. On Wednesday, more than two-thirds of the member states of the Organisation for the Prohibition of Chemical Weapons (OPCW) voted to authorise the international body to identify the perpetrators and sponsors of a chemical weapons attack. It also specifically called on the OPCW’s technical secretariat to begin work on identifying the perpetrators behind the use of chemical weapons in Syria. The draft decision, sponsored by 30 countries, was adopted at the fourth special session of the conference of the states parties to the Chemical Weapons Convention at the Hague, with 82 in favour and 24 negative votes. While Europe, the United States and their allies voted ‘yes’, there was strong oppo...
Read more

As financial insecurity rises in urban India, so does investment in insurance

Image
Scroll.in March 13, 2020 Urban Indians are becoming less confident about their financial security. Up to 58% of them fret over financial independence post retirement, which is a 4% increase from last year. An equal share of urban Indians worry about meeting their daily medical expenses and sustaining their current lifestyle once they stop working. The findings are part of a survey published by Delhi-based Max Life Insurance in association with London-based consultancy Kantar. The firms surveyed 7,014 respondents in 25 cities, including six metros, nine tier-1 cities, and 10 tier-2 cities, between December 2019 and January 2020. Source: Max Life Insurance via Quartz The trends Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz A significant share of urban Indians also say their families will have no financial support in the event of the breadwinner’s death. In such a scenario, around 57% believe the family sav...
Read more

ED tracks Swiss Bank A/Cs of Agusta scamster

The Poineer February 10,2019 Rakesh K Singh The Enforcement Directorate (ED) has tracked a dozen Swiss bank accounts in the name of Rajiv Saxena, who is key accused in the Rs 3,600 crore AgustaWestland VVIP chopper scam. The ED has also found out accounts held by  his family members and associates where the kickbacks in the now scrapped deal were allegedly parked. Two bank accounts are in the name of Rajiv Saxena’s  associates Pankaj Jain and Sumita Jain who are also the authorised signatories. The  third is in the name of another associate Ajit Singh Bubber, but Rajiv and his family members are authorised signatories. The remaining nine accounts are largely owned and operated by Rajiv, his family members and associates. Rajiv Saxena was deported by the UAE authorities on January 30 and the ED formally arrested him the next day and a court later granted his remand to the agency. He is currently undergoing custodial interrogation by the ED. The agency had in 2017...
Read more