New FDI Policy as a Happiness Shield

Lack of resources and technology is a major obstacle in the path of economic growth in developing countries, so FDI, such as foreign investment, plays an important role in debt-free finance management. Keeping this in mind, the Government of India simplified and liberalized the regulations in the country to attract FDI and in the year 2019, 100 percent FDI was allowed through automatic route in coal mining-related activities and contract manufacturing.

But in a few months, the novel coronavirus epidemic has changed the situation of industrial units in the world economy and India’s industrial units have also remained untouched. After foreign investment in industrial units, the acquisition or control of investors is strengthened to deal with ‘Department of Industry Promotion and Internal Trade (DPIIT)’ which made some changes in FDI rules to acquire or control Indian companies.

The investment will be allowed which means that the Indian government will now monitor investments from these countries, although economic experts believe that the changes in FDI rules have been done only for the purpose of monitoring foreign investment from China but India has included all its neighbors in these new changes to avoid any kind of dispute.

Although China called the changes in FDI policy as discriminatory, it has been described as a violation of the WTO guidelines, as well as a request to reconsider these changes. In this context, apart from China, no other neighbor of India has given any response yet but it is being said that China is trying to build consensus among India’s neighbors so that it can effectively address this issue before the WTO.

Recently Housing Development Finance Corp. Ltd (HDFC) has reported that the People’s Bank of China (PPOC) has increased its stake in HDFC from 0.8% to 1.0%. As a major influence of the novel coronavirus epidemic, the total capital value of most of the companies with a top share in the Indian market has come down by 20% to 40%, so India is looking at Chinese investment as an opportunistic step. is. This has increased the likelihood of China’s control over Indian companies resulting in recent rules changes.

According to the report released by Think Tank GateHouse in February 2020, Chinese investors have invested around $ 4 billion in Indian startup companies and in the last few days, China has been taking an aggressive stance and investing in Indian companies. However, due to recent changes, existing investors will also have to get permission for new investment in these industrial units.

Here it becomes necessary to understand that by taking advantage of the current situation from other European countries or American countries, control can be established by acquiring Indian industrial units, then why change the foreign investment policy by keeping only China at the center.

It is understandable that for the last few decades China has been in a state of surplus in global trade as at present China is claiming that it has dealt with the corona epidemic and the economic activity has become normal there, in contrast. The current crisis in Europe and America, which is facing an economic crisis, has deeply hurt the economic system there.

China has sufficient capital, while the current economic crisis has resulted in a rapid devaluation of Indian industrial units, China investors can control them by investing in top industrial units and startups, as well as on the Indian economy. As an example, we can see many African countries that have received investments from China. So, China is not only driving the economy there but also controlling the foreign policy there.

Because of China’s huge investment in Ethiopia, WHO’s Ethiopian director ‘Tedras’ has been accused of favoring China in the context of the Corona epidemic. It is not that only India has taken such steps to secure its economic interests. Similar steps are being taken by many European countries including Australia. So that any foreign attempts to acquire and control home industrial units can be stopped. Since the current global economy is facing a very serious crisis, it would be meaningless to expect various countries to follow the ideal standards of globalization, and it would not seem logical to call China an exception to the disaster.