covid impact: Change in FDI rules to save Indian companies becoming ‘sitting ducks’: ASSOCHAM

Government’s pre-emptive decision to curb ‘opportunistic takeovers/acquisitions’, amidst Covid-19 turmoil is justified and should thwart those seeking to prowl upon the Indian companies under financial stress, said ASSOCHAM secretary general Mr Deepak Sood.

”Even as governments all across the world are battling against the cross-country pandemic, businesses and corporates have seen massive erosion in their valuations in the stock markets. Market capitalisation of scores of companies has melted by more than 50-60 per cent, with their stocks trading at levels which do not reflect their true valuation. Such companies can be sitting ducks for opportunist takeover/acquisitions,” said Mr Sood.

He said, by amending the FDI rules through the Press Note No 3 , the Department for Promotion of Industry and Internal Trade, has not only brought the FDI proposals for greenfield investments but also infusion into the existing projects, under the ‘government route’. Any possible round-tripping of investment into stressed assets has been guarded against.

” While ASSOCHAM always stands for a liberal FDI regime, the move to curb any opportunistic takeover is pragmatic and fair, under the extra-ordinary cirumstances arising out of Coronavirus pandemic”, Mr Sood said, adding the erosion in the market capitalisation is out of the fear factor ,spread all across the global investor community. ”Yes, India has brought in nation-wide lockdown impacting businesses but these businesses have been built over the years and possess lot of inherent strength.”

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