The Indian government has brought China under the ambit of regulations that would prevent takeovers and acquisitions of Indian firms amid the Covid-19 pandemic, and an official said on Saturday any Chinese investments will now require the government’s approval.
The move follows concerns that China could take over Indian companies at a time when their valuation has taken a massive hit because of the economic crisis triggered by the pandemic that originated in Wuhan nearly four months ago, the official said on condition of anonymity.
The revision of the foreign direct investment policy to prevent opportunistic takeovers also follows China’s central bank buying a 1.01% stake in HDFC in the first quarter of 2020.
Earlier, all investments from Pakistan and Bangladesh required the government’s approval for security reasons. The scope of this existing policy has been widened to cover all neighbouring countries that share a border with India, the official said quoting a government order.
Without naming China, the order issued by the department for promotion of industry and internal trade (DPIIT) on April 17 said the government had reviewed the foreign direct investment (FDI) policy “for curbing opportunistic takeovers/acquisitions of Indian companies due to the current Covid-19 pandemic” and amended the FDI policy.
“The change in policy will make it mandatory for all foreign investments from China, Pakistan and Bangladesh to go through the government’s scrutiny. So far, government permission was mandatory only for investments coming from Pakistan and Bangladesh,” the official cited above said.
According to the order, “an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route”.
Other than investments from countries that share a border with India, non-resident entities – foreign individuals or companies – can invest in India without the government’s approval except in sectors where FDI is restricted, the order said.
The order also requires the government’s approval for transferring ownership of an Indian company to any “existing or future” foreign investor belonging to the countries that share a border with India.
India has 15,106.7 km of land border. The country shares land borders with Bangladesh (4,096.7 km) China (3,488 km), Pakistan (3,323 km), Nepal (1,751 km), Myanmar (1,643 km), Bhutan (699 km) and Afghanistan (106 km),but there are some exemptions for Nepal and Bhutan-based entities, the official said.
Experts said the takeover threat is not completely ill-founded.
Vikram Doshi, partner (tax and regulatory) at global consultancy firm PwC India said, “Covid-19 will impact several businesses, especially ones that are highly leveraged. It will open up takeover opportunities in many sectors.”
“This press note is an attempt to place a check and give the government an opportunity to review such takeovers and investments coming into India from specific jurisdictions,” he said.
Atul Pandey, partner in the law firm Khaitan & Co, said, “The notification by the government primarily intends to stem any attempts by Chinese firms to take control of Indian firms which have been affected and weakened by Covid-related lockdowns.”
He added, “Any fresh investments by Chinese firms or any transfer of investments by existing investors to Chinese firms will be covered under this notification, and will require government approval.”
Pandey said the government’s intention is clear in wanting to evaluate Chinese investments on a case-to-case basis.
“However it is important to note that this notification will have the force of law once necessary amendments are introduced to the relevant FEMA [Foreign Exchange Management Act] regulations. Similar steps are being taken by the European Union and other jurisdictions like Australia,” he said.
Congress leader Rahul Gandhi appreciated the move in a tweet: “I thank the Govt. for taking note of my warning and amending the FDI norms to make it mandatory for Govt. approval in some specific cases.”
On April 12, he had cautioned the government against takeover threats. “The massive economic slowdown has weakened many Indian corporates making them attractive targets for takeovers. The Govt must not allow foreign interests to take control of any Indian corporate at this time of national crisis,” he had said.
Chinese Ambassador Shares Seven Buzzwords To Showcase Fast-changing China
Chinese Ambassador to the United States Qin Gang on Wednesday shared with Americans seven buzzwords that are currently popular in China to illustrate what is going on in his country.
“The buzzwords I shared with you today reflect the changing and unchanging elements in our values when China experiences rapid economic growth and profound social transformation,” said Qin in his keynote speech at the online Forum on Tourism, Hospitality and Cultural Exchange co-hosted by the U.S.-Asia Institute and Las Vegas Sands Corp.
The first buzzword Qin mentioned was “People First, Life First,” which was widespread during China’s fight against the COVID-19 pandemic, and reflects a deep concern for humanity.
Likewise, “Heroes in Harm’s Way” has also gone viral in China, which refers to the everyday heroes who put their mission before their lives and made fearless sacrifices to fight the pandemic, Qin said.
To “Lie Flat” is a term to describe the youngsters who give up ambitions and do the bare minimum to get by, Qin said, adding “lie-flatters” are either people from well-off families or those who believe in whatever comes their way.
“Versailles,” originally from the “Palace of Versailles” in French, was borrowed to describe the self-claimed aristocratic spirit. On social media, it is used to label humble-braggers, he said.
“Involution,” one of the latest buzzwords in China, indicates irrational or involuntary competitions, while “Double Reduction” is a recent policy formulated by the government to address involution in education, which aims to restore the original purpose of education by restricting capital in the sector, Qin said.
The last buzzword, “Celebrity Fan Clubs,” refers to the phenomenon that some celebrities use internet to hype up themselves and cause their fans to admire them in an irrational manner, while such abnormalities stem from a chain of interests dominated by online platforms and the capital that supports them, he said.
In his speech, Qin said that socialism with Chinese characteristics requires material progress and cultural-ethical advancement, adding, “We need to keep fine traditional values, uphold fairness and justice, and not get lost in a market economy.”
“(Being) rooted in traditional Chinese values is a concern for the common good of humanity,” he added.
Singapore Parliament Approves Law To Tackle Foreign Interference
Singapore’s parliament has approved a law that gives broad powers to the government to deal with foreign interference that has sparked concern from the opposition and experts about its wide scope and limits on judicial review.
The small and open city-state, which says it is vulnerable to foreign meddling, targeted fake news with a far-reaching law in 2019, and joins nations such as Australia and Russia that have passed laws in recent years to deter foreign interference.
The bill, formally known as the Foreign Interference Countermeasures Act (FICA), was passed late on Monday with 75 members voting in favour, 11 opposition members objecting and two abstaining, local media reported.
Among the measures, FICA allows authorities to compel internet, social media service providers and website operators to provide user information, block content and remove applications.
Those deemed or designated as “politically significant persons” under the law will have to comply with strict rules relating to donations and declare their links to foreign entities.
Instead of court, an independent tribunal, chaired by a judge, will hear appeals against the minister’s decisions, a move the government says is necessary to protect national security.
The tribunal’s decisions will be final.
The government said FICA does not cover the building of overseas partnerships, soliciting overseas businesses, networking with foreigners, sourcing for donations or those discussing policies or political matters that affect their businesses with foreign colleagues or business partners, or supporting charities.
“As long as they are done in an open and transparent manner, and not part of an attempt to manipulate our political discourse or undermine public interest such as security,” K Shanmugam, minister for home affairs, said in parliament.
It will also not affect Singaporeans expressing their own views or engaging in advocacy.
The home affairs ministry has also previously said it would not apply to foreign individuals or publications “reporting or commenting on Singapore politics, in an open, transparent and attributable way.”
But some critics say its broad language risks capturing even legitimate activities, while rights group Reporters Without Borders said the law could ensnare independent media outlets.
Experts and Singapore’s opposition parties have called for narrowing the scope of executive powers and more oversight through the judiciary.
The bill was passed without strengthening “the circumscribed checks and balances, particularly judicial review,” said Eugene Tan, a law professor at Singapore Management University.
“While assurances were given, they could have been given unequivocal expression through legislative codification.”
However, Shanmugam said the bill represented the “best balance…between dealing with the risks and providing checks against abuse.”
Afghanistan: Stay Home, Female Kabul Government Workers Told
The new Taliban mayor of Afghanistan’s capital Kabul has told female municipal employees to stay home unless their jobs cannot be filled by a man.
Hamdullah Nomany said the Taliban “found it necessary to stop women from working for a while”.
It is the latest restriction imposed on Afghanistan’s women by the country’s hard-line new Islamist government.
During their previous rule in the 1990s women were barred from education and the workplace.
After seizing the country last month following the withdrawal of US forces, the Taliban said women’s rights would be respected “within the framework of Islamic law”.
But the Taliban favour a strict interpretation of Islam’s legal system, Sharia law.
Since taking power working women have been told to stay at home until the security situation improves, and Taliban fighters have beaten women protesting against the all-male interim government.
The Islamist group appears to have shut down the women’s affairs ministry and replaced it with a department that once enforced strict religious doctrines.
And this weekend secondary schools reopened, but with only boys and male teachers allowed back into classrooms. The Taliban said it was working on reopening schools for girls.
According to the Kabul mayor about a third of the municipality’s 3,000 employees are women. He said some would carry on working.
“For example, women work in the women’s toilets in the city where men cannot go,” he said.
“But for the positions that others [men] can fill, we have told them [women] to stay at home until the situation is normalised. Their salaries will be paid,” he added.
On Sunday, there were small protests outside the women’s affairs ministry while another group of women held a press conference to demand their rights.
One of those protesting at the ministry said “we do not want this ministry to be removed. The removal of women [means] the removal of human beings.”
In a separate development, the Afghanistan Independent Human Rights Commission said it had been unable to fulfil its duties since the Taliban’s takeover.
The organisation said in a statement that its buildings, vehicles and computers had all been taken over by the Taliban.
PART II: Why Is Uganda Provocative, Disrespectful?
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