India tightens FDI policy for bordering countries

India has tightened its foreign direct investment (FDI) policy, making mandatory its prior approval for foreign investments from bordering countries to curb "opportunistic takeovers" of domestic firms following the Covid-19 pandemic.

Also, a transfer of ownership in an FDI deal that benefits any country which shares the borders with India will need government approval, the Department of Promotion of Industry and Internal Trade (DPIIT) under India's commerce ministry said in a statement on Saturday evening.

The countries sharing the land borders with India are China, Bangladesh, Pakistan, Afghanistan, Bhutan, Nepal and Myanmar.

The decision has been taken to curb "opportunistic takeovers or acquisitions" of domestic firms due to the current Covid-19 pandemic but the DPIIT did not name any country, reports our New Delhi correspondent.

Before Saturday's change, the Indian government's prior permission was mandatory only for investments coming from Bangladesh and Pakistan.

The revised rule has now brought companies from all countries under the government approval route.

The DPIIT decision came after the People's Bank of China increased its stake to 1.01 percent in private Indian mortgage lender Housing Development Finance Corporation.