Amid the rising political stand off between India and China, Narendra Modi led Indian government has decided to reject Shanghai Fosun Pharmaceutical Group Co’s proposed $1.3 billion takeover of an Indian drugmaker, the biggest planned acquisition ever by any Chinese company in India
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi blocked the acquisition of Gland Pharma by Shanghai Fosun Pharmaceutical Group and thus wrecked the biggest-ever Chinese acquisition in the country.
This comes as a retaliatory step by the Indian government after continued aggression from China over Doklam region, Sikkim. The tension between the two countries has escalated in the recent weeks and there have been slight murmurs of military action from both the countries.
The rejection by the Indian PM will be a huge setback for Fosun Pharmaceuticals, which had sealed off the deal with Gland Pharma. “This is almost like a sanction,” said Abhijit Joshi, a mergers and acquisitions lawyer at Veritas Legal in Mumbai. He further said, “Rejecting a deal like this is almost like sending a signal to say, ‘no Chinese business,’ which means there could be a retaliatory action, trade wise, by China.”
Prime Minister Narendra Modi’s decision will surely have an impact on trade relation with China. “From Chinese investment into India for M&A, yes there’s going to be an impact,” Mr Joshi said. “They’re going to be increasingly nervous about investing in India. That capital that was available from China is not going to be available, at least in the short term, which means doing a deal is going to be that much more difficult.”
But this decision will also send a clear signal to China that India is not economically dependent on it.
May be in future we don't see made in China products on Indian soil.
This comes as a retaliatory step by the Indian government after continued aggression from China over Doklam region, Sikkim. The tension between the two countries has escalated in the recent weeks and there have been slight murmurs of military action from both the countries.
The rejection by the Indian PM will be a huge setback for Fosun Pharmaceuticals, which had sealed off the deal with Gland Pharma. “This is almost like a sanction,” said Abhijit Joshi, a mergers and acquisitions lawyer at Veritas Legal in Mumbai. He further said, “Rejecting a deal like this is almost like sending a signal to say, ‘no Chinese business,’ which means there could be a retaliatory action, trade wise, by China.”
But this decision will also send a clear signal to China that India is not economically dependent on it.
May be in future we don't see made in China products on Indian soil.
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