india-unlikely-to-lift-ban-on-chinese-investments-soon

India is unlikely to lift the restrictions on Chinese investments anytime soon, according to Chief Economic Adviser V. Anantha Nageswaran.

 

Speaking at an event in Mumbai, he emphasised that both nations must recognise their mutual dependence and economic benefits before any significant changes can be expected. His comments come amid strained ties between India and China, particularly following the 2020 border clashes.

 

Since 2020, India has increased scrutiny on Chinese investments, tightening policies to restrict Chinese companies from gaining a foothold in Indian markets.

 

The decision was largely influenced by the deadly confrontation at the Himalayan frontier in June 2020, which resulted in casualties on both sides. The move marked a turning point in India-China relations, leading to stricter trade regulations and investment barriers.

 

Nageswaran indicated that discussions have begun to address the widening trade deficit between the two nations.

 

India has been vocal about its concerns regarding the trade imbalance, which has reached nearly $93 billion to $95 billion. The country remains among the top three globally in terms of trade deficits with China.

 

Despite the ongoing dialogue, any immediate resolution appears unlikely. Nageswaran pointed out that both sides are navigating the issue cautiously, with progress expected to be slow.

 

His remarks suggest that while India acknowledges the need for economic engagement, national security concerns and strategic interests continue to shape its policies on Chinese investments.

 

The restrictions on Chinese investments were introduced as part of a broader effort to reduce dependency on Chinese businesses and promote domestic industries. Since then, India has taken steps to encourage self-reliance in key sectors, including manufacturing and technology.

 

Various Chinese firms, particularly in the telecom and financial sectors, have faced increased regulatory hurdles when attempting to expand their presence in India.

 

Meanwhile, India has been actively diversifying its trade partnerships to reduce its reliance on Chinese imports. The government has promoted initiatives such as the ‘Make in India’ campaign to boost local manufacturing and attract foreign investments from other countries.

 

This shift aligns with India's broader strategy of strengthening economic resilience while maintaining cautious engagement with China.