No Relief for Chinese Investors as India Sticks to Its Trade Barriers

India likely to maintain ban on Chinese investments for a while, Chief Economic Adviser (CEA) V. Anantha Nageswaran informed media today during an event in Mumbai. He reiterated that any changes to the current restrictions would require deeper understanding between both countries, as per Reuters.

"It requires both sides to understand mutual dependence and benefits. I don't think it is something that you'll expect to see immediate results because both the sides are crossing the river by feeling the stones," Nageswaran said.

The CEA also noted that India has initiated a conversation with its neighbouring country China to discuss growing trade deficit between the two.

"India is among the top three countries with the largest trade imbalance with China, with a trade deficit of $93bn to $95bn," he added.

India-China Tensions and Economic Barriers

Following clashes between the Indian and Chinese soldiers on Himalayan frontier, India tightened its scrutiny of Chinese investments in 2020. The clash left 20 Indian and four Chinese soldiers dead in June that year, leading to increased tension between both the countries.

As a result, the Indian government has implemented stricter investment norms, which mandated government approval for any investment from countries that share a border with India.

Even as not specifically targeted, the move affected Chinese businesses primarily which had made huge investments in Indian startups, technology companies and other infrastructure related projects.

Ministry of Electronics and Information Technology restricted access to a total of 267 Chinese apps in 2020. However, as things are gradually seemed to be warming up between both the countries, India Today reported that many banned Chinese apps have started reappearing now.

Fashion retailer Shein also made a comeback to Indian market after a licensing agreement with Reliance.

Last year, India's an inter-ministerial panel has cleared five-six investment proposals in the electronics manufacturing sector including some pure-play Chinese companies along with others with connections to the neighbouring country, The Economic Times reported.

Even as tensions might have eased slightly, economic restrictions remain a key tool in India's strategic approach toward China.