The Indian government has renewed approval for foreign direct investment (FDI) by Chinese companies in the manufacturing sector electronics, easing some of the existing restrictions on investment from countries that share a land border with the South Asian republic.
According to newspaper The Economic Times the cabinet approved FDI from the Chinese electronics manufacturer Luxshere, which is a business partner of the American Apple, an investment in the creation of a joint venture between the Indian company Micromax and the Chinese Huaqin Technology, in which the latter will hold a minority stake. FDI from several Taiwanese companies listed in Hong Kong and de facto controlled by China also received approvals.
The first selective approval of Chinese investment this year came under pressure from Indian electronics makers to ease restrictions on deepening and expanding electronics supply chains from India. At their request, the government set up an inter-sectoral committee to review approvals for FDI and key technologies from China that are urgently needed by Indian industry. At the same time, Chinese nationals are still prohibited from holding executive positions in joint ventures with Indian partners, in which they can only hold a minority stake.
Prior to the border conflict between India and China in May-June 2020, the Indian government approved Chinese FDI proposals without the due diligence process that became mandatory in July of that year. It was introduced after India restricted procurement of government projects, including those developed through public-private partnerships, from companies in countries that share land borders due to security concerns. This rule applies primarily to companies in China and Pakistan.
China became India's largest trading partner in the financial year 2023-2024, which ended on March 31. Bilateral trade volume stands at USD 118.4 billion, India's imports from China reach USD 101.7 billion and India's exports to China reach USD 16.67 billion.