As Narendra Modi enters his third term as India's Prime Minister, the country is reportedly expected to adopt a somewhat softer stance on its economic ties with China by easing its stringent regulations, at least to some extent.
Reuters, citing unnamed sources, reported that New Delhi is considering relaxing restrictions on Chinese investment in specific sectors. India may allow Chinese companies to invest in areas where the country lacks expertise, such as solar panels and battery manufacturing. This move aims to boost domestic production.
However, sources told Reuters that India will maintain strict controls on Chinese investments in sensitive sectors like electronics and telecommunications. The decision to open up specific areas to Chinese investment will be made on a case-by-case basis.
According to the Economic Survey 2024 released by the Finance Ministry of India on July 22, India is shifting its focus towards attracting foreign investment from China as a key strategy to enhance its global electronics exports, according to the Economic Survey 2024. By encouraging Chinese companies to invest in India's electronics sector, the government aims to develop a robust domestic supply chain and increase the value added within the country's electronics manufacturing ecosystem.
The Economic Survey 2024 highlights the need for India to carefully balance imports from China with capital inflows from the same country. The report suggests that attracting Chinese investments is a more strategic approach to benefit from the "China-plus-one" strategy.
By encouraging Chinese companies to set up operations in India, the country can add more value to the manufacturing process, and export finished products to markets like the US and Europe. This strategy aims to reduce India's reliance on imports from China and address the growing trade deficit.
According to earlier reports by Bloomberg and Reuters, the Indian government reportedly plans to expedite visa processing for Chinese engineers and technicians, which is crucial for the installation of Chinese-made machinery in Indian factories. The move aims to reduce the current visa issuance time from 4-5 months to a significantly shorter period of 30 days.
This initiative is part of broader efforts to streamline investments and address delays at manufacturing units, which have been hindering billions of dollars worth of investments. The government plans to issue faster business visas for technicians across 14 high-tech electronics manufacturing sectors.
Source: DPIIT, June 2024
