13 Mar Foreign direct investment (FDI) (Economy-GS-3, Indian express)
- Foreign direct investment (FDI) is more than 10% shareholding by a foreign entity in a single Indian company. Corona-2020: Chinese FDI required approval by Indian govt, so as to prevent any opportunistic takeover of Indian companies.
- 2021: Economy is recovering and many Indian companies starved of capital, Banks reluctant to give loans, so govt may relax these norms of Chinese FDI.
- Dangers If China acquires significant ownership of Indian companies?
- 1) Chinese owners will force Indian companies to use China made equipment / Raw material/Intermediate goods.
- 2) They may infiltrate their agents among the senior management of Indian companies
- 3) Injection of Malware/surveillance-codes into equipment made by Indian companies for Indian govt.
- Solution?
- Australia and Canada foreign investment laws- their govt may prohibit incoming FDI if threat to national security. India’s foreign exchange management act (FEMA) 1999, Need to be amended suitably.
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- Australia and Canada foreign investment laws- their govt may prohibit incoming FDI if threat to national security. India’s foreign exchange management act (FEMA) 1999, Need to be amended suitably.
Plutus IAS Current Affair Team Member
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