China investment curbs to stay: Finance Minister
Restrictions on investments from bordering nations will be retained, finance minister Nirmala Sitharaman has said, in what seemed to be a rebuttal of reports that the government is looking to ease curbs on investments from China.
“I cannot blindly receive foreign direct investment (FDI) because I want money for investment, forgetful or unmindful of where it is coming from,” Sitharaman said at the US’ Wharton business school.
“We want business, we want investment, but we also need some safeguards, because India is located in a neighborhood which is very, very sensitive,” the FM added.
There have been speculations over India easing curbs on Chinese investments, particularly since the Economic Survey 2024 suggested that given the global geopolitical situation, the best way for India to get deeper into global supply chains was through attracting Chinese FDI.
The place of origin of some investments could spark the concern of authorities, rather than the identities of investors, the Union minister said. So, she insisted, such restrictions “will be in place in the national interest”.
Sitharaman’s comments dent the hope of any immediate liberalisation of trade ties with China, as a follow-up move on the deal reached between the two nations on the sidelines of BRICS leaders’ summit in Russia, to ease long-standing border tensions.
The minister added that infrastructure, investment, innovation and inclusiveness are the four key focus areas for the Narendra Modi government to make India a developed nation by 2047. Elaborating on this, she said: “The first is infrastructure, whether it is physical such as bridges and ports or digital which is critical for so many different purposes. The second would be to invest in it. In that comes the element of private investments. But more importantly, have public investment go in to kick-start the whole thing.”
“In the year when we will be celebrating 100 years of Independence from British rule, that is 2047, we want to be and we aspire to be a developed country,” she added.
The Economic Survey had argued that Chinese investments would help the country benefit from the China-plus-one approach, which Europe and others are following. “As the US and Europe shift their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then export the products to these markets rather than importing from China, adding minimal value, and then re-exporting them,” the survey said.
India has a huge goods trade deficit of $85 billion with China. Chinese FDI in India is minimal. The government recently talked about easing visas for Chinese professionals for the benefit of certain sectors such as solar panel manufacturing. This is seen as necessary to speed up domestic projects.