India is reevaluating its approach to Chinese investments as it seeks to bolster its manufacturing sector and become a major player in global supply chains. The Modi government, which had imposed stringent vetting on Chinese investments and visas following a deadly border clash with China in 2020, is now looking to relax some of these restrictions.
The initial measures, aimed at curbing Chinese influence and protecting domestic industries, had led to billions of dollars in potential investments being turned away and created additional bureaucracy for Indian firms with Chinese stakeholders. However, as businesses struggle to scale up production despite government subsidies, there is growing recognition of the need for Chinese technology and capital.
Sushant Singh, a lecturer at Yale University, highlighted that high-tech sectors such as solar cells and electric vehicles are heavily reliant on Chinese supply chains. Naveen Jindal, head of Jindal Steel & Power, noted that while he supports tariffs on Chinese steel, there is a pragmatic need for Chinese technology and equipment in various industries.
To address this, the Indian government is considering easing investment rules, particularly for firms with up to 10% Chinese ownership, and establishing a post-investment monitoring framework to address security concerns. This move aims to attract global companies with Chinese partnerships and integrate India more effectively into high-tech global supply chains.
India has also relaxed visa issuance for Chinese nationals, with nearly 2,000 short-term visas approved between November 2023 and July 2024. Foreign Minister Subrahmanyam Jaishankar indicated that while India remains open to Chinese business, it seeks to define the terms and sectors of engagement.
The shift in policy comes amid rising Indian imports from China and a growing trade deficit, with Chinese goods remaining in high demand despite earlier restrictions. Indian Chief Economic Adviser V. Anantha Nageswaran emphasized the inevitability of India integrating into Chinese supply chains to meet its manufacturing ambitions.
Overall, the potential easing of restrictions reflects a strategic recalibration aimed at fostering growth while balancing national security concerns.
