Is it true that now all investment flows from Hong Kong have also been shut down by the government of India?

I would not say the government has shut down the route but it has surely made it more difficult and the approval process more stringent. In the midst of the border row with China, Indian government has certainly hardened its stance by putting brakes on all types of investments coming from China and Hong Kong.

It must be noted that investments to the tune of $1.6 billion from China and HK will be put on hold as a result. These investments would now be allowed only after total due diligence is completed and the government is clear there is no undue Chinese influence in the money flow into India.

These restrictions are nothing new. For example, India has restrictions in place on investment inflows from most of the contiguous nations. These include nations that share a land border or rather a porous land border with China; including Bangladesh and Bhutan.

Analysts are worried that this could create a problem of sorts as many of the hedge funds that are currently active in India are domiciled either in China or in Hong Kong. It could have some temporary impact on flows.