India to keep ban on Chinese investments for now, says Chief Economic Adviser

The government is unlikely to lift its ban on Chinese investments anytime soon, according to Chief Economic Adviser (CEA) V. Anantha Nageswaran.

Speaking at an event in Mumbai on Tuesday, Nageswaran said that any changes to the current restrictions would take time and require a deeper understanding between both countries.

“It requires both sides to understand mutual dependence and benefits,” Nageswaran said as quoted by Reuters.

When asked whether India was considering easing its stance on Chinese investments, he responded, “I don’t think it is something that you’ll expect to see immediate results because both the sides are crossing the river by feeling the stones.”

Since 2020, India has increased its scrutiny of Chinese investments. The restrictions were put in place following a deadly clash between Indian and Chinese soldiers along their Himalayan border in June 2020. The conflict resulted in the deaths of 20 Indian and four Chinese soldiers, leading to increased tensions between the two nations.

Following the border clashes, India introduced stricter foreign investment rules, requiring government approval for any investment from countries that share a land border with India. This move primarily affected Chinese firms, which had previously made large investments in Indian startups, technology companies, and infrastructure projects.

While investment restrictions remain in place, India has initiated discussions with China regarding the widening trade deficit between the two countries. According to Nageswaran, India is among the top three countries with the largest trade imbalance with China. The trade deficit currently stands between $93 billion and $95 billion.

India has long expressed concerns over its heavy dependence on Chinese imports, particularly in sectors such as electronics, pharmaceuticals, and machinery. The government has been pushing for greater self-reliance in manufacturing to reduce its reliance on Chinese goods.

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