Suman Bery, Vice Chairman at NITI Aayog stated that India needs a "clearer set" of standards for accepting Foreign Direct Investments (FDI) from China quickly because the current method of case-by-case evaluation is cumbersome. Bery went on to say that, similar to what the US does, India now examines FDI requests from China for security concerns.
"I think what is needed, on the basis of experience, is a clearer set of guidelines because case-by-case review is slow and we do have an interest in getting investment from China because China is surplus in savings, it has got good technology," he stated to PTI. The pre-budget Economic Survey released earlier this week also made a compelling argument for requesting FDI from Beijing in order to stimulate domestic manufacturing and expand into export markets.
The deputy chairman of NITI Aayog said, "But the truth is that we have diplomatic difficulties with them and so we have to be cautious." Currently, the majority of foreign direct investment (FDI) entering India is approved automatically; however, FDI from nations that share India's borders must have required government clearance in all sectors.
With just 0.37 percent (USD 2.5 billion) of the entire FDI equity inflow recorded in India between April 2000 and March 2024, China is ranked 22nd. China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan are nations that border India on land.
The Indian and Chinese armed forces have been engaged in a standoff since May 2020, and despite their disengagement from several locations of friction, the border dispute has not yet been fully resolved. After a devastating battle in the Galwan Valley in June 2020—the first severe military combat between the two sides in decades—the ties between the two countries drastically deteriorated. India has consistently argued that normal relations with China are contingent upon peace prevailing in the border regions.
In response to increasing tensions, more than 200 Chinese mobile applications, including Wechat, Tiktok, and Alibaba's UC browser, have been blocked in India. Moreover, the nation turned down a sizable investment request from BYD, an EV manufacturer. But earlier this year, JSW Group's proposed purchase of a 38% share in MG Motor India Pvt Ltd was approved by the Competition Commission of India (CCI).
SAIC Motor, which has its headquarters in Shanghai, owns all of MG Motor India. In order to expedite the acceptance of visas for Chinese experts and technicians whose skills are needed by the Indian sector to establish manufacturing capacity, the government is also considering further simplifying procedures.
A number of industry participants in India have petitioned the government, complaining that they are having difficulty obtaining visas for Chinese nationals whose experience is needed for tasks such as installing machinery in factories. Even while China has not invested much in India, the two countries' bilateral commerce has increased significantly.
China has surpassed the US to become India's biggest commercial partner, with two-way trade valued at USD 118.4 billion in 2023–2024. In the most recent fiscal year, India's exports to China increased by 8.7% to USD 16.67 billion. The primary industries with robust export growth to that nation are iron ore, plastic, linoleum, spices, cotton yarn/fabrics/made-ups, handloom products, fruits and vegetables, and spices.
