India Finance Minister Backs Call For Chinese Investment Return

India’s Finance Minister has backed a call for the country to reopen the door to more Chinese investment.

Tensions between the neighbours, which culminated in military clashes and dozens of deaths in 2020, disrupted the flow of Chinese funds across the border.

But Chief Economic Adviser V Anantha Nageswaran said on Monday that New Delhi should focus on Foreign Direct Investments from China to boost India’s exports to the US, and other western countries, to help keep India’s growing trade deficit with Beijing in check.

And Finance Minister Nirmala Sitharaman said at a press conference on Tuesday that the adviser’s office works at an “arm’s distance” but “that doesn’t mean I am disowning the suggestion,” becoming the first minister to back such a move.

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India tightened its scrutiny of investments from Chinese companies and halted major projects four years ago, as relations between the two nuclear giants soured following clashes on their largely undemarcated Himalayan frontier left 20 Indian and four Chinese soldiers dead.

Western countries are looking for alternative import avenues to reduce their reliance on China in global manufacturing and supply chains, and India should aim to benefit from it, the adviser’s report had said.

A senior Indian official said in January that investment curbs could be lifted if the border between the nuclear-armed Asian giants remains peaceful. However, diplomatic and military talks to resolve the border issues have remained unsuccessful.

Along with investments scrutiny, India has also virtually blocked visas for all Chinese nationals since 2020, but it is considering easing them for Chinese technicians, as it had hindered investments worth billions of dollars.

India’s net FDI inflow dropped by 62.17% to $10.58 billion in 2023-24 (FY24), a 17-year-low, from $27.98 billion the previous year, central bank data showed.

Reuters with additional editing by Sean O’Meara

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Sean O’Meara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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