View: Why govt’s recent FDI move may not bode well for the Indian economy

On April 12, Congress leader Rahul Gandhi demanded in a tweet that GoI ‘protect’ Indian corporations from takeover by cash-flush Chinese entities. He was spurred after HDFC announced on April 11 that the People’s Bank of China (PBOC) has increased its shareholding in HDFC from 0.8% to 1.01%.

The Chinese central bank had bought these 17,492,909 crore HDFC shares worth Rs 2,976 crore between January and March 2020. This level of shareholding won’t give PBOC a stool next to the watchman’s at HDFC’s front door. Yet, GoI responded to this somewhat immature and kneejerk demand with surprising alacrity.

It responded on April 18 with a hasty order that entities from countries that share land borders with India — Pakistan, Afghanistan, China, Nepal, Bhutan, Bangladesh and Myanmar — have to take permission from the government prior to making that investment.