On April 18, India amended its FDI policy by changing norms about doing business with countries with shared borders. At present, there are two routes with which foreign investments can be made- automatic in which companies do not any approval from the government and through government route in which approval is required. India removed the automatic route for investments with countries with which it shares borders and made it mandatory for companies to get approval. While it applies to Pakistan, Bangladesh, Nepal, China, Myanmar, Bhutan, and Afghanistan, it is more centred on China. This was done to curb any "opportunistic takeovers" of domestic firms following the coronavirus pandemic. According to notification issued by Department for Promotion of Industry and Internal Trade.
‘A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which 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.’
PTI reported Chinese embassy spokesperson Ji Rong said in a statement that, ‘The additional barriers set by the Indian side for investors from specific countries violate WTO's principle of non-discrimination and go against the general trend of liberalisation and facilitation of trade and investment."
India is not the only country to have taken this step several European countries have also tightened their FDI norms. In March, the European Commission had also issued guidance for investments and stated that greater government scrutiny will be required for investments from Non- EU investors.