Foreign control - the statesman

India’s proposed move to tighten foreign investment norms by formally recognising “Foreign-Owned and Controlled Entities” (FOCE) is not just a bureaucratic tweak ~ it is a decisive step

toward aligning FDI oversight with economic reality. The global investment landscape has evolved rapidly, and it is only prudent that our regulatory frameworks catch up. For years, indirect

foreign investments ~ often routed through complex offshore structures ~ have operated in a grey zone. These investments allowed foreign actors to effectively control Indian businesses while

sidestepping FDI rules that were designed to protect national interests. Whether in e-commerce, fin-tech, pharmaceuticals, or media, the use of layered corporate entities and overseas funds

has enabled backdoor entry into restricted sectors. With the FOCE category, the government is rightly attempting to draw a clear line: if control lies abroad, the obligations under FDI

policy must apply. This clarity is especially timely. India has emerged as a pivotal destination for global capital, but this openness must be matched with strategic oversight. Since 2020,

when prior approval was mandated for investments from countries sharing land borders with India, particularly China, the intent to shield critical sectors from opaque foreign control has

been evident. However, without accounting for indirect control structures, enforcement remained porous. The new FOCE rules aim to plug this gap. This move also signals India’s growing

confidence in shaping global investment norms, not just reacting to them. As one of the world’s largest economies, India has every right to set terms that prioritise transparency,

reciprocity, and long-term national interest. Critics may argue that tighter regulations could deter foreign investment. But this view misses the point. India is not shutting its doors ~ it

is simply demanding transparency and compliance with the rules that domestic businesses are already bound by. In fact, clarity and predictability in regulation are strong incentives for

serious investors. Those who wish to operate within India’s framework, in good faith, will find no undue hindrance. Furthermore, insisting that indirect ownership be treated on par with

direct investment upholds both the spirit and the letter of India’s FDI policy. Advertisement If an offshore fund controls an Indian entity, then its actions ~ whether restructuring or

transferring shares ~ should be scrutinised for their impact on national policy goals and sectoral limits. This is especially important in sectors where control translates into access to

sensitive data, consumer influence, or strategic infrastructure. By ensuring that valuation norms, disclosure requirements, and ownership thresholds apply uniformly, the FOCE framework also

levels the playing field. Indian entrepreneurs and companies have long contended with asymmetries in compliance. Rectifying this imbalance enhances fairness and builds trust in the

regulatory system. In essence, India is not retreating from global capital ~ it is maturing in how it engages with it. The FOCE classification, if implemented with precision and fairness,

can reinforce India’s reputation as a stable, rules-based economy that values both investment and sovereignty Advertisement This clarity is especially timely. India has emerged as a pivotal

destination for global capital, but this openness must be matched with strategic oversight. Since 2020, when prior approval was mandated for investments from countries sharing land borders

with India, particularly China, the intent to shield critical sectors from opaque foreign control has been evident. However, without accounting for indirect control structures, enforcement

remained porous. The new FOCE rules aim to plug this gap. This move also signals India’s growing confidence in shaping global investment norms, not just reacting to them. As one of the

world’s largest economies, India has every right to set terms that prioritise transparency, reciprocity, and long-term national interest. Critics may argue that tighter regulations could

deter foreign investment. But this view misses the point. India is not shutting its doors ~ it is simply demanding transparency and compliance with the rules that domestic businesses are

already bound by. In fact, clarity and predictability in regulation are strong incentives for serious investors. Those who wish to operate within India’s framework, in good faith, will find

no undue hindrance. Furthermore, insisting that indirect ownership be treated on par with direct investment upholds both the spirit and the letter of India’s FDI policy. If an offshore fund

controls an Indian entity, then its actions ~ whether restructuring or transferring shares ~ should be scrutinised for their impact on national policy goals and sectoral limits. This is

especially important in sectors where control translates into access to sensitive data, consumer influence, or strategic infrastructure. By ensuring that valuation norms, disclosure

requirements, and ownership thresholds apply uniformly, the FOCE framework also levels the playing field. Indian entrepreneurs and companies have long contended with asymmetries in

compliance. Rectifying this imbalance enhances fairness and builds trust in the regulatory system. In essence, India is not retreating from global capital ~ it is maturing in how it engages

with it. The FOCE classification, if implemented with precision and fairness, can reinforce India’s reputation as a stable, rules-based economy that values both investment and sovereignty

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