India has hinted at the possibility of relaxing its stringent scrutiny of Chinese investments, subject to maintaining peace along the disputed border. This marks the first sign that the four-year-old investment restrictions imposed by India could be lifted.
Speaking at the annual World Economic Forum meeting in Davos, Switzerland, Rajesh Kumar Singh, a senior Indian official in charge of industrial policy, acknowledged that the recent de-escalation of border tensions between India and China could pave the way for improved investment ties.
The longstanding border dispute has been a major source of strain between the two nuclear-armed Asian nations.
In 2020, India implemented heightened scrutiny measures for investments originating from countries that share its borders, necessitating an additional layer of vetting and security clearances. This move was widely perceived as a response to a clash between Chinese and Indian troops along their disputed 3,800-km (2,400-mile) Himalayan frontier, resulting in casualties on both sides – the most severe military conflict in decades.
The stringent investment curbs had a profound impact, disrupting billions of dollars worth of investments between the world's two most populous countries. Planned projects, including those involving Chinese automakers BYD and Great Wall Motor, were put on hold.
Rajesh Kumar Singh indicated that the easing of border tensions could create an environment conducive to improving investment relations. When asked whether the message from India was that Chinese investments hinged on maintaining a peaceful border, Singh responded, "You can't have somebody nibbling at your border while at the same time having red-carpet treatment for investments from there."
He characterized the investment restrictions as a measured "step back" from India's broader trend of opening up to foreign investment in recent years. India has actively worked to reduce hurdles for inbound investment, either lowering or eliminating foreign ownership caps in various sectors and implementing automatic approval processes to facilitate smoother investment flows.
The official asserted that, "The potential easing of investment restrictions offers hope for renewed economic collaboration between the two nations, fostering stability and prosperity in the region", adding that the international community will be closely watching for further developments in this delicate geopolitical and economic balance.
Follow us
