India to encourage Chinese FDI, ease non-trade barriers

With tensions along the Sino-Indian border easing somewhat, Indian policymakers are now more open to upgrading bilateral economic relations between the two Asian giants.

- S VENKAT NARAYAN

Now is being seen as an opportune time, particularly when US President Donald Trump is pushing India to the corner on reducing tariffs and forcing it to agree to terms set by Washington, especially on tariffs.

According to informed sources, discussions are on between departments to dilute or neutralise some of the restrictions on trade and investments that were put in place five years ago after clashes between Chinese and Indian soldiers in Galwan in 2020.

Some of these proposals have gained traction following industry demands, and include low hanging economic outcomes such as easing of visa restrictions for Chinese personnel and lifting some tariff and non-tariff barriers on imports of consignments.

Some Chinese Apps may be allowed again ,too, people in the know said.

Resumption of flights and issuance of visas to Chinese scholars are proposals already on the cards, the sources said.

On the investment front, there are indications the Indian side is now open to allowing inflows from Beijing as a countermeasure to the widening trade deficit between the two countries.

Despite the many restrictions as on date, trade flows continue to be remarkably in favour of China.

New Delhi may consider relaxing its 2020 policy, which requires approval by the government for investment from companies in countries that share land borders with India.

According to at least two sources aware of discussions, there is a growing view in India that entering into a visibly closer dialogue with China on normalising business relations could send out a signal to the US and likely act as a potential hedge.