India has drafted rules proposing tighter scrutiny of new Foreign Portfolio Investors from China and Hong Kong. Accordingly, India will screen all foreign direct investment from countries with which it shares land border. The move is aimed at preventing takeover of Indian companies when their asset prices are depressed because of the coronavirus pandemic.
The draft proposal has been drafted in consultation with the Commerce ministry and capital market regulator, the Securities and Exchange Board of India, and is currently being reviewed by the Finance ministry. There are currently 111 registered FPIs from Hong Kong and 16 from China. Foreign portfolio investors are among the biggest drivers of Indian financial markets.