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ARTICLE · 06 APRIL 2022

Foreign Investment By Bordering Countries – Bringing Clarity To Press Note 3

Khaitan & Co.
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The PN3 had introduced certain protectionist measures against investments from countries sharing land borders with India.

IndiaGovernment, Public Sector
Moin Ladha
Moin Ladha
Kevin Shah
Kevin Shah
Priyal Sanghvi
Priyal Sanghvi
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Introduction

On 18 April 2020, the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, by way of Press Note No.3 (2020 Series) (PN3), announced a critical change to the Consolidated Foreign Direct Investment Policy to curb opportunistic takeover of stressed and strategic assets, or Indian entities in light of the impact of COVID 19 pandemic. The change called for prior approval of the government for Foreign Direct Investment (FDI) made by (i) any entity based in any bordering country of India; or (ii) any beneficial owner of the investment situated in or citizen of any bordering country of India. The PN3 also applied to any direct or indirect transfer of ownership of any existing or future FDI and any such subsequent change in beneficial ownership. Further, on 8 December 2020, the Ministry of Finance, Government of India notified the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2020 (NDI

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