NEW DELHI, July 25: India needs a ‘clearer set’ of guidelines for approving Foreign Direct Investments (FDI) from China expeditiously as the system of case-by-case review is slow, NITI Aayog vice chairman Suman Bery has said.
Bery further said at the moment India scrutinises FDI proposals from China for security purposes similar to what the United States is doing.
“I think what is needed, on the basis of experience, is a clearer set of guidelines because case-by-case review is slow and we do have an interest in getting investment from China because China is surplus in savings, it has got good technology,” he told PTI.
Earlier this week, the pre-budget Economic Survey has also made a strong case for seeking FDI from Beijing to boost local manufacturing and tap the export market.
“But the fact of the matter is that we have diplomatic difficulties with them and so we have to be cautious,” the NITI Aayog vice chairman observed.
At present, the bulk of the FDI coming into India falls under the automatic approval route, however, FDI from countries sharing land borders with India needs mandatory government approval in any sector.
China stands at 22nd position with only 0.37 per cent share (USD 2.5 billion) in total FDI equity inflow reported in India from April 2000 to March 2024.
Countries which share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.
The Indian and Chinese militaries have been locked in a stand-off since May 2020 and a full resolution of the border row has not yet been achieved though the two sides have disengaged from a number of friction points.
The ties between the two countries nosedived significantly following the fierce clash in the Galwan Valley in June 2020 that marked the most serious military conflict between the two sides in decades.
India has been maintaining that its ties with China cannot be normal unless there is peace in the border areas.
Following these tensions, India has banned over 200 Chinese mobile apps such as Tiktok, Wechat, and Alibaba’s UC browser. The country has also rejected a major investment proposal from EV maker BYD.
However, earlier this year the Competition Commission of India (CCI) cleared JSW Group’s proposed acquisition of a 38 per cent stake in MG Motor India Pvt Ltd.
MG Motor India is a wholly-owned subsidiary of Shanghai-headquartered SAIC Motor.
The government is also looking at further streamlining processes for timely approval of visas for Chinese professionals and technicians whose expertise is required by the Indian industry to set up manufacturing capacity.
Certain Indian industry players have approached the government stating that they are facing problems in getting visas for Chinese professionals whose expertise is required for things like setting up machines in factories.
Though India has received minimal FDI from China, the bilateral trade between the two nations has grown multi-fold.
China has emerged as the largest trading partner of India with USD 118.4 billion two-way commerce in 2023-24, edging past the US. India’s exports to China rose by 8.7 per cent to USD 16.67 billion in the last fiscal.
The main sectors which recorded healthy growth in exports to that country include iron ore, cotton yarn/fabrics/made-ups, handloom, spices, fruits and vegetables, plastic and linoleum. (PTI)
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