Chinese engagement: India has struck an optimal new balance

New Delhi's Press Note 3 revision opens up economic opportunities without compromising security

- CHANDRAJIT BANERJEE is director general, Confederation of Indian Industry

India’s recalibration of its approach to Chinese investments marks an important moment in the evolution of India-China economic ties. The revised framework under Press Note 3 (PN3) signals a pragmatic attempt to balance India's strategic and security considerations with the economic opportunities that carefully structured investment from China could bring. PN3 was issued in covid year 2020 to prevent opportunistic takeovers of Indian firms. It was a year marked by high tension after a border conflict with China.

The objective of the revised PN3 framework is clear: to enable Indian companies to gain access to new technologies, deepen domestic value addition, integrate more effectively with global value chains and expand manufacturing capabilities. As India seeks to strengthen its position in emerging sectors and advanced manufacturing, carefully structured partnerships with technologically capable economies can help accelerate this process.

India’s economic relationship with China has historically been marked by a sharp imbalance between trade and investment. While China is India’s largest source of imports and among its important export destinations, Chinese investment in India is limited.