Regulatory Update on Investments into India from China

Published on June 05, 2020

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The Government of India has come up with an amendment to India’s Exchange Control Regulations whereby investments from and transfers to entities and/or beneficial owners from neighboring countries have been brought within the purview of Government Approval Route. Earlier, such investments were allowed under the Automatic Route (except a few cases) without any prior approval. The main objective behind this amendment was to curb opportunistic Takeovers / Acquisitions. A major impact of this amendment will be on investments from Chinese entities because from all the neighboring countries, major investment flows into India are from China. 

We have undertaken a detailed analysis of the new regulations, especially on one of the main parameters of the changes i.e. Concept of Beneficial Owner, in the attached publication - kcmSpark. It also throws light on certain other implications (intended or unintended) that are likely to be caused because of the language used in the new provisions and the clarifications that the Government should come up with in order to settle the apprehensions surrounding the new provisions.

This publication could be relevant for companies from China and HK who either have investments in India or are planning to invest in India.

We hope that this provides the necessary insight to BKR firms working for groups/clients where such a situation emerges.

 

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Download Kcmspark Fdi Policy May 31 2020