India Rules Out Any Plan to Restrict Chinese Foreign Portfolio Investors

New Delhi (Sputnik): Border tension has been simmering between India and China after a skirmish between patrol parties in Ladakh's Galwan Valley sector earlier this month. Both sides have declined US President Donald Trump's offer to intervene in the matter. 

Amid an ongoing border dispute with China and more than a month after imposing restriction on Chinese trade, India indicated on Friday that it will not impose any restrictions on Chinese portfolio investments into the country.

A top finance ministry official has ruled out any plan to do so, adding: "There is no call on restricting foreign portfolio investments from China." The official also clarified that no such proposal on banning or restricting FPIs from China has even been mooted by the Indian government. 

On April 18, India amended its Foreign Direct Investment norms requiring all neighbouring countries to seek permission before making investments in Indian companies.

The Indian ministry of commerce amended the rules with the aim of preventing “opportunistic takeovers” of Indian companies during the COVID-19 pandemic.

"A country, which shares a 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," the ministry said. In effect, this shuts out all automatic investment in India. 

Almost six days before the amendment, the People's Bank of China increased its stake in India's HDFC - a non banking financial institution - via purchase of 17.5 million equity shares. India's principal opposition Congress party turned it into a political issue with party leader Rahul Gandhi urging the Narendra Modi government to ensure that Indian businesses do not face opportunistic buyouts.