New Delhi: Fresh Business Talks Between India and China
India and China are currently working on a new plan to improve business exchanges and encourage investments between the two countries. This move comes as both nations are looking to mend their commercial relationship amid warming diplomatic ties, said sources familiar with the situation.
During Chinese President Xi Jinping’s upcoming visit for the BRICS summit on September 12-13, it is expected that Beijing will present an investment package for India. This package may include the establishment of a special economic zone that offers better access to maritime routes. President Xi is set to meet with Indian Prime Minister Narendra Modi in New Delhi, following recent discussions that took place during National Security Advisor Ajit Doval’s visit to China.
One of the key objectives of this partnership seems to be the introduction of Chinese electric vehicles, particularly from the leading manufacturer BYD, into the Indian market.
Easing Investment Processes
China is also pushing for smoother supply chains, even as it navigates the complexities of international trade. Another idea on the table is to set up an export processing zone in India that would be funded by China, facilitating third-country exports.
Although the total investment may not be substantial at first, both sides are focused on gradually rebuilding their relationship after a prolonged period of tension. Xi’s first visit to India since 2019 presents a crucial opportunity for both nations to make strides in investment announcements, particularly concerning the proposed export processing zone.
India is also looking into simplifying the approval process for Chinese investments, especially in non-sensitive sectors. “We have already made significant progress, but there is room for further enhancements,” noted one source. However, there are remaining restrictions on Chinese investments in sensitive areas such as defense and projects near the Line of Actual Control.
The Indian government is keen on receiving assurances from China regarding easier access to technology and key raw materials. Efforts are being made to strengthen this aspect for the benefit of Indian industries.
Cautious Optimism
Experts caution that mere announcements do not guarantee that the plans will come to fruition. Professor Srikanth Kondapalli from Jawaharlal Nehru University pointed out that a previous commitment made by China in 2014 to invest $20 billion resulted in only $2 billion being invested over the next twelve years.
Before the COVID-19 pandemic and the Galwan Valley clashes, around 1,000 Chinese companies were operating in India, but that number has since decreased. There is cautious optimism about a potential revival in business activities after Xi’s visit to New Delhi.
The Indian government is urging China to boost its investments in India and increase imports from the country, particularly in industrial goods, to address the significant trade deficit.
