Unlikely restrictions on Chinese investment into India will be lifted anytime soon, says top official

A review of the nearly five-year old restrictions on Chinese investments into India is unlikely in the near future, a senior official said on Feb 11.

Chief Economic Advisor V Anantha Nageswaran said both countries have to understand the importance of mutual dependence and mutual benefits.

"I don't think it is something you would expect to see immediate results because both sides are crossing the river by feeling the stones, so to speak," Nageswaran said, replying to a specific question on whether any changes are afoot.

It can be noted that following violent clashes between Indian and Chinese soldiers in Galwan valley in 2020, the Indian government introduced measures restricting investments from countries sharing a land border with India that was taken to be an attempt to restrict Chinese play.

Speaking at the IVCA event, Nageswaran did acknowledge that both countries have been engaged in a conversation on the trade imbalances, probably drawing from the parleys on various issues lately.

"We triggered a conversation because we basically wanted to highlight the fact that our bilateral trade deficit with China in 2024 might be close to US $93-95 billion. And India is one of the top-three countries with a huge trade imbalance with China. Naturally, if you are excessively import-dependent, it raises certain vulnerabilities in terms of supply chain," he said.

"But the question is: when it comes to investing in India, whether China also sees it as a mutual win-win is also a question we need to answer," Nageswaran added.

Speaking at the same event later, Renuka Ramnath of Multiples Alternate Asset Management said the private equity fund managed by her had to "leave hundreds of million dollars away" because of stipulations.

Noted corporate lawyer Zia Mody also went public with her concerns on the issue and specifically highlighted the restrictions imposed on general partners as well as being a big difficulty.

(PTI)