Govt Unlikely to Change FDI Policy on China Despite Industry Pressure

Indian government is unlikely to remove investment restrictions on Chinese companies despite increasing pressure from the Indian industry to ease FDI norms, the TOI reported. This comes at a time when US President Donald Trump’s tariffs have raised alarm bells to rising threat of Chinese companies, as they are likely to divert some of their exports to other Asian markets, including India. 

This move by the government is aligned with its cautious stance with Chinese companies given the background of troubled geopolitical relations, especially post-2020 border clash between the two neighbouring countries. The government in the past five years has shown no signs of relaxing Press Note 3 of 2020. The 2020 note restricts investments from countries that share a land border with India, including China.

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“... an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route,” said the government in the note. 

The TOI report mentioned that the government’s stance remains unchanged, mainly as the Chinese regime is seen to be hostile towards the Indian government’s push for manufacturing. 

Push to Ease FDI Restrictions on China 

But it’s not just the Indian private sector that is vouching to ease FDI from China at the time when the country is dreaming to integrate itself into the global supply chain. At an ASSOCHAM event, India’s Chief Economic Advisor (CEA), V Anantha Nageswaran, emphasised greater collaboration with China. 

“...So, one has to first resolve the question of, how do we integrate China into our supply chain, before we think about how to integrate ourselves in the global supply chain,” the CEA had said. 

The chairman of the 16th Finance Commission, Arvind Panagariya mentioned that apart from a few sensitive sectors, India should allow Chinese investments.