INDIA Law and Practice Contributed by: Raj Ramachandran, Varun Sriram, Krutamana Pisipati, Aadhitya Logeshen and Abheejit V, JSA
7.4 National Security Review/Export Control As detailed in 7.3 Restrictions on Foreign Invest- ments , certain inbound investments can only be made through the government approval route. Investment in sensitive sectors such as telecommunications and defence would also require confirmation from the rel- evant Ministry, eg, the Ministry of Home Affairs. The regulatory framework for outbound investments by Indian entities is governed by the Foreign Exchange Management (Overseas Investment) Rules, 2022, and the RBI Master Directions (2024-25). While outbound investments are generally permitted, restrictions apply to certain sectors such as real estate, gambling, and dealings in financial products linked to the Indian rupee, all requiring prior government approval. Additionally, outbound investments in the financial services sector are also subject to regulatory restric- tions. Indian entities engaged in regulated financial services can invest abroad, subject to specific finan- cial and prudential criteria. Investments by non-finan- cial entities or those targeting sensitive sub-sectors often require prior approval from the RBI or govern- ment authorities. This framework balances facilitating overseas expan- sion with safeguarding domestic financial stability and regulatory oversight, reflecting a liberal yet cautious stance consistent with India’s evolving policy priori- ties. 7.5 Antitrust Regulations Under the Competition Act, 2002, as amended by the Competition (Amendment) Act, 2023 (effective September 2024), certain mergers, acquisitions, and amalgamations, collectively referred to as “combi- nations,” must be notified to the Competition Com- mission of India (CCI) if the prescribed jurisdictional thresholds are met. The current thresholds include two key components, as follows. Deal Value Threshold (DVT) From 10 September 2024, any combination where the transaction consideration (direct, indirect, immediate, or deferred) exceeds INR 20,000 million (approxi-
mately USD240 million) and the target enterprise has substantial business operations in India must be noti- fied to the CCI, regardless of other asset or turnover thresholds. The concept of “substantial business operations” includes situations where the target derives 10% or more of its global turnover or gross merchandise value from India, and where its India-based turnover or gross merchandise value (respectively) exceeds INR5,000 million (non-digital sectors). Asset and Turnover Thresholds For all other combinations, traditional thresholds remain applicable. Notification is required if inter alia: • the combined assets of the parties in India exceed INR25,000 million (approximately USD 282,037); or • the combined turnover of the parties in India exceeds INR75,000 million (approximately USD 846,066); and • de minimis: The target’s assets in India exceed INR4,500 million (approximately USD50,763) or turnover in India exceeds INR12,500 million (approximately USD141,012). However, the “de minimis” exemption based on asset or turnover thresholds does not apply if the deal value threshold is breached, emphasising stricter scrutiny for high-value transactions. Filing obligations depend on the nature of the combination: acquirers notify in acquisitions and hostile takeovers, while joint notices are filed for mergers or amalgamations. These thresh- olds aim to balance transparency and regulatory over- sight with ease of doing business by focusing CCI’s attention on economically significant transactions that From a labour and employment perspective, Indian companies are now primarily governed, by the four pieces of legislation (collectively referred to as the “Labour Codes”): • the Code on Wages, 2019; • the Industrial Relations Code, 2020; • the Code on Social Security, 2020; and may impact market competition. 7.6 Labour Law Regulations
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