India considers allowing more Chinese investments

Policymakers wary of firms being taken over, but want to spur growth

- Nirmala Ganapathy

Should India say yes to more Chinese investments? This is the question Indian policymakers are grappling with amid a festering border row and fear of "predatory" practices by Chinese firms.

India continues to be cautious about Chinese investments, even as it seeks foreign investment inflows to spur economic growth and boost its manufacturing industry with an eye to becoming the world's factory.

People with knowledge of the matter say there are internal discussions about whether India should relax restrictions on Chinese investments, even as the policy remains unchanged.

During the Covid-19 pandemic years, there were concerns in India that Chinese companies with solid financing would take over local firms. In April 2020, Delhi tightened its foreign direct investment (FDI) rules for countries sharing a land border with India, in a move widely seen as aimed at China.

"As of now, the policy remains unchanged. We are giving approval on a case-by-case basis," senior government official Rajesh Kumar Singh told The Straits Times on Aug 16.

He added: "We look at it (each investment proposal from China) and see if it meets our criteria internally, and we clear it." Since 2020, India has given the green light to 34 per cent of investment proposals from Chinese companies, said Mr Singh.

Among them is a joint venture, announced in March 2024, between Chinese state-owned automobile manufacturer SAIC Motor and India's JSW Group. SAIC aims to invest up to US$2 billion (S$2.6 billion) in India in the coming decade. The venture is eyeing an annual production of more than one million vehicles, focusing on compact cars and sports utility vehicles for the Indian market.