AA Edit: Creeping dragon

People have been anxious about the risk the novel coronavirus poses to their lives. Since ages, pandemics have had precisely the same effect — lives snuffed out and hundreds of thousands of families pushed into misery. However, this virus appears to be different in one small measure — it appears to be helping cash-rich countries prowl all over the world looking for easy and strategic corporate acquisitions.

The People’s Bank of China, the Communist nation’s central bank, has acquired one per cent stake in India’s largest mortgage lender HDFC over the last three months when the stock prices have plummeted to historic lows. Though the one per cent stake may not give any kind of influence to the Chinese bank, it forewarns us about the possibility to foreign countries deepening their influence in India.

A fortnight ago, the European Commission, the executive arm of the European Union, too, decided to ward off hostile foreign takeovers in sectors which are considered to have a strategic role in the continent. The EU already has laws that empower governments to block corporate takeovers which it believes are not in the interest of its people.

The Narendra Modi government should follow the European example and issue an ordinance to set an upper limit in terms of shareholding for foreign entities. If any foreign company wants to acquire a stake beyond such threshold, it should seek the government’s approval. Otherwise, China alone can buy all listed companies in India by just spending a half of its foreign currency reserves. The government must, therefore, be vigilant about the moves of cash-rich foreign companies, especially the Chinese, who are known world over for shopping sprees. Let’s not allow the country which spread the deadly virulent disease in the world to exploit the uncertainty in stock markets and reap rich dividends.