US tariffs looming, India looks at easing non-trade barriers, relaxing Chinese FDI

With some dialling down of tensions between India and China along the line of control, policy makers are more open to upgrading bilateral economic relationships now.

- SANDEEP & ANIL SASI MUMBAI, MARCH 23 SINGH NEW DELHI,

MUMBAI, MARCH 23 WITH SOME DIALLING down of tensions between India and China along the line of control, policy makers are more open to upgrading bilateral economic relationships now. It is being viewed 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 sources aware of developments, 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, they 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 NEW DELHI, many restrictions as on date, trade flows continue to be remarkably in favour of China. Here, New Delhi may consider relaxing the Centre's 2020 policy which requires approval by the Centre for investment from companies in countries that share land borders with India.

At least two sources who are 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. A presentation is learnt to have been recently made by the Finance Ministry in favour of opening up some of the restrictions earlier this fiscal.