Reed Smith Client Alerts

India has become the latest country to bolster its foreign takeover regulations in response to the public health crisis caused by COVID-19.
Surveyor inspect the bulk head of commercial cargo ship in floating dry dock, recondition of overhaul repairing and painting, sand blasting in dry dock yard

India has amended its foreign investment policy to require that all acquisitions by investors from any bordering countries obtain prior government approval. This effort serves to curb opportunistic takeovers of Indian companies that are struggling financially as a result of the COVID-19 crisis. This heightened scrutiny applies to any such investment transaction, including “the transfer of ownership of any existing or future foreign direct investment...directly or indirectly.”

Countries bordering India include Pakistan, Bangladesh, Afghanistan, Nepal, Bhutan, and, most notably, China. Chinese firms and funds are particularly active at this time, ready to use the market slump to gain financial momentum as the health crisis relaxes in central Asia and proceeds toward the Western markets. India, however, remains uniquely vulnerable to traders due to its large economy and recent spike in startup businesses that have become undervalued and desperate for funding. As a result, Indian authorities will screen any future attempts by Chinese firms to control domestic businesses. The goal is to deter Chinese investors that are preying on cheap, distressed Indian assets.

Countries across Europe are taking similar actions to protect their companies from strong corporate raiders from China, Saudi Arabia, and other countries. We summarize this trend in further detail in the following client alert: European Countries Increase Protections against Foreign Takeovers amid COVID-19 Crisis. India is the first major economy in Asia to announce tightened foreign takeover screening measures in response to the COVID-19 crisis.

While these policy changes strengthen protections only against countries sharing a land border with India, investors from the United States and Europe should expect to see heightened scrutiny of potential Indian deals generally. If the public health crisis worsens into the third and fourth fiscal quarters, cross-border acquisitions will likely experience delays or even suspensions as countries continue to prioritize national protectionism of their weakened, but strategically important, sectors.

Reed Smith’s India Business team and Global Mergers and Acquisitions team include multidisciplinary lawyers from the United States, Asia, Europe, and the Middle East who stand ready to advise you on the issues above and other COVID-19-related issues you may be facing.

Our Reed Smith Coronavirus team includes multidisciplinary lawyers from Asia, EME and the United States who stand ready to advise you on the issues above or others you may face related to COVID-19.

For more information on the legal and business implications of COVID-19, visit the Reed Smith Coronavirus (COVID-19) Resource Center or contact us at

Client Alert 2020-251