India may draw up list of sectors for investments from China

The Centre may think about drawing up a list of industries where permission could be given for garnering investments from China in specific sectors, as long as there is no security risk involved and the money leads to boosting local manufacture.

The decision to draw up a list of industries that might get a shot of Chinese investment comes in the wake of reports last week that the Ministry of Commerce and Industry besides several security departments in India were assessing the idea before taking a final call in the matter.

The Squirrels had reported on July 25 how the Ministry of Commerce and Industry along with several security departments in India were deliberating over whether such a relief can be given to certain hi-tech firms of China in sectors such as critical minerals and solar modules.

Once an official decision is taken in the matter, the specified sectors in India would be allowed to draw investments from China without extra inspection under the Press Note-3 of the Foreign Direct Investment (FDI) regulation that applies to neighbouring countries.

Talk of reviving trade ties with China gained ground ever since the government’s Economic Survey FY24, tabled in the Lok Sabha a day before the Union Budget FY25, suggested India should work at garnering more investment from the neighbouring nation in order to bolster the domestic manufacturing sector, The Squirrels said in its earlier report, which also noted how the Economic Survey had suggested that India should offer sops to attract Chinese FDI.

The latest buzz in the matter, which suggests the Centre might draw up a list of industries where Chinese investment would be allowed, also signals a possible change in Indo-China relations that have remained tense over the past four years.

India’s relations with China had soured after clashes in May 2020 along the Line of Actual Control (LAC), works as a boundary between the two nations. Subsequently, in June 2020, India banned 58 Chinese apps including TikTok and also came down heavily on visa consent.

Economic experts, however, have stated Indo-China tension is hampering India’s chances to be a global manufacturing hub.