Indian government likely to clarify on Chinese FDI norms

India gate, New Delhi, India. Photo: Pixabay

 The government is likely to issue clarifications to its recent notification that altered foreign direct investment (FDI) norms for Chinese companies planning to invest in India, two people aware of the development said requesting anonymity.

The fresh changes had left businesses with unanswered questions on the “beneficial ownership” of foreign investment arms looking to invest in the country.

“The government is in receipt of industry representations seeking clarity on what percentage of shareholding in an investment vehicle will constitute beneficial ownership. It’s a policy-level decision on whether the intent is to scrutinise all flows from China or prevent the acquisition of Indian companies at depressed valuation. The government does not want to prevent any investment—just scrutinise the deals to ensure that investments are fair and Indian promoters are not losing control of strategically important companies at depressed valuations,” said a government official, the first of the two people cited above.

One suggestion has been to keep the Companies Act 2013 threshold of 10% shareholding in a company to define significant beneficial ownership, said the second of the two people quoted above.

“The other is to keep it at 25%, which is the minimum threshold defined under the Securities and Exchange Board of India (Sebi) Act. The government will also clarify on the aspects of indirect acquisitions so that it does not affect genuine fund infusion,” he said.

The government had on 22 April issued a notification under Fema which required investments originating from seven neighbouring countries including China, to seek prior approval of the government.

Shayan Ghosh in Mumbai contributed to this story.

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.