MNCs with Hong Kong offices hit by India's new procurement rules: Report

India's revised procurement rules are impacting multinational companies (MNCs) using regional headquarters in Hong Kong to set up operations or businesses in India.

The government is examining the issue after the finance ministry was made aware of the matter, according to a report by The Economic Times.

Ownership could be taken into account during the registration process, sources told the paper.

Moneycontrol could not independently verify the story.

"A number of these companies are not Hong Kong-based as each of these companies, in turn, is a 100 percent-owned subsidiary of UK, Europe or US-based companies. Thus, Hong Kong is just a pass-through country," said Ved Jain, past president of the Institute of Chartered Accountants told The Economic Times.

The finance ministry on July 23 made amendments to the General Financial Rules 2017, and said companies from neighbouring countries should receive political and security clearance before bidding for public contracts in India.

The ministry said it modified the norms "to enable imposition of restrictions on bidders from countries which share a land border with India on grounds of defence and national security".

The revision in the rules was seen as a move to curb investments from China amid tensions along the Line of Actual Control (LAC).

Since Hong Kong is a Special Administrative Region (SAR) of China, the norms apply to it by extension.