New Delhi: India does not intend to encourage foreign direct investments (FDI) from China, Commerce and Industry Minister Piyush Goyal said on Friday, indicating New Delhi’s intentions of not easing overseas investment curbs imposed on the neighbouring country in 2020.
FDI applications from countries sharing land borders, such as China, have to mandatorily seek government approval for all sectors. This policy was issued in April 2020.
“As of now, there’s hardly any foreign direct investment from China...It was the same 25 years ago when it (FDI) was open (from China), not too much Chinese investment has come to India. Nor are we encouraging any significant investment coming in from China at all. At the moment, that is the policy,” Goyal said here at an event.
The remarks assume significance as certain quarters are of the view that the rule needs to be eased to attract technology and capital.
In 2020, the government made its approval mandatory for FDI from countries that share land borders with India.
Countries that share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.
China stands at the 22nd position with only 0.37 per cent share ($2.5 billion) in the total FDI equity inflow reported in India from April 2000 to March 2024.
Last year, the pre-budget Economic Survey made a strong case for seeking FDI from Beijing to boost local manufacturing and tap the export market.
Goyal also said that India’s effort is to integrate its economy with the developed world, who believe in fair play and follows honest business practices, and where domestic industries get an equal opportunity to do business.
“Everything will be based on reciprocity. Everything will be based on mutual trust and mutual benefit. And therefore, I personally, don’t see any great disturbance say even except for a short period of time. I think this reset that the world is going through is actually very good for the world,” he said.
He added that the genesis of this tariff problem goes back to the late 1980s and mid-1990s.
“Then China was accepted into the World Trade Organization and MFN (most favoured nation) benefits were given to China by all countries of the world, collectively with the desire and hope that we could trust them to behave better.
“Sadly, that never happened. And over the years, country after country and industrial sector after sector has realized how their practices have hurt businesses and economies,” he said.
He added that in 2019, India decided not to join the Regional Comprehensive Economic Partnership (RCEP) as it felt that the guiding principles on which free trade should work were not being respected in that grouping. China is part of RCEP.
And today it is being vindicated by the current situation in the world, he said.