NEW DELHI: Govt is unlikely to easeinvestment checkson Chinese companies amid growing calls to review FDI norms as it remains wary of flows from across the border. US President Donald Trump’s tariffs have made it even more alert to the growing threat of Chinese companies and their exports, some of which may be diverted to India and other Asian markets.
Private sector has been pushing the Modi govt to review its investment regime, which was tightened after Covid outbreak in 2020 and the Chinese hostility in Ladakh resulted in a ban on several apps and visa and govt procurement curbs. The clamour for easing the FDI norms has only gone up in the last few days with many experts and commentators arguing that an alliance with countries such as China, especially for technology, will help India navigate the crisis better.
Govt’s concerns are manifold including the opaque nature of ownership of Chinese companies and their close ties with the communist regime and the military. Besides, China’s non-market economy status based on its policies, be it subsidies to manufacturers or loan write-offs, which some in govt view as indirect doles, add to the concern over easing of curbs.
In any case, the regime is seen to be hostile towards India’s bid to gain more manufacturing muscle. While govt has been seeking to attract global giants to set up factories in India, Chinese authorities have often sought to tighten the screws on these companies, whether it is Apple’s top phone makers or small vendors that supply components to the iPhone maker, or other players.
The investment checks through Press Note 3 – that mandates case by case approval for all investment from countries that share a land border with India – also provides govt flexibility in allowing who it wants to allow. In the past, the tool has been used to block EV-maker BYD’s bid to invest $1 billion through a joint venture with Megha Engineering, which later got entangled in the electoral bonds controversy.
Govt sources suspect that some of the noise was being generated by Chinese companies whose bid to expand has been stalled in the absence of govt approvals, prompting them to dilute their equity in favour of Indian entities.