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China is India’s biggest trading partner, but New Delhi will not reduce its guard

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New Delhi. Nearly a year after the bitter Galwan Valley clash between India and China, New Delhi has slowly started clearing pending investment proposals from Beijing. Where small foreign direct investment (FDI) proposals are being approved in the initial phase. At the same time, sources said that India is not opposed to Chinese FDI. A policy maker on the condition of anonymity said “India has never banned Chinese FDI. The only change in the regulatory framework is the need for approval from the authorities for investments by Chinese companies. This is not a very regressive move.” And yes we will take precautions and I don’t think such concerns should arise.”

It is also learned that India will study the proposals one by one and those cases where there is no security threat will be approved.

“The government has always maintained that healthy FDI inflows are needed for economic growth and employment opportunities,” he said.

Since April 2020, India has received over 120 FDI proposals from China worth about $1.63 billion.

According to India Briefing, most of these investments are for brownfield projects.

He also noted that despite the hype, however, China remains India’s largest trading partner. The actual proportion of FDI in New Delhi is only $2.43 billion—0.51 percent of the total inflows. Singapore, Mauritius, Netherlands, Japan, US, USA are included in the list of countries from where India has received the largest share of FDI.

However, India also needs to be cautious as China is increasingly ramping up its investments in Indian companies, including startups.

ASSOCHAM Secretary General Deepak Sood told India Narrative that, “Such decisions involve a lot of changes. I don’t think they can be handled in a hurry. The authorities have to take appropriate decisions keeping in mind the best interest of the country.”

Last year, the government had amended its FDI policy to bar any ‘opportunistic’ takeover or takeover in domestic companies by its neighboring countries even before the Galwan Valley incident. The move was aimed at protecting domestic companies from hostile takeovers amid falling valuations due to the COVID-19 pandemic.

Reports suggested that several China-backed funds, including the Industrial and Commercial Bank of China (ICBC) and the China Investment Corporation (CIC), were aggressively looking for investment opportunities in Indian companies in various sectors as their valuations increased due to the spread of the pandemic. was impressed with.

In India, FDI is allowed either through the automatic route, where companies do not require any government approval, or through the government route, for which companies have to seek government approval.

A press note by the Department for Promotion of Industry and Internal Trade (DPIIT) states “A non-resident entity can invest in India, subject to the FDI policy, except in sectors/activities that are prohibited. The entity, which shares a land border with India or where the beneficial owner of the investment in India is located or is a citizen of any such country, may invest only under the Government route.”

The Chinese state-backed Global Times said in an article in January that “the resilience of China-India economic and trade relations should not be dismissed outright. It is true that the Modi government pursued self-reliance to support domestic industrial growth.” strategy, but this does not mean that sugar should be isolated from supply by being integrated into the local market.


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