Amid the ongoing crisis in West Asia, the Indian government has taken a major step regarding China. The Union Cabinet has approved several relaxations in the rules for Foreign Direct Investment (FDI) from China, clearing the way for Chinese investments in India. After the Doklam standoff in 2020, relations between the two countries had been strained. At that time, India had set several conditions on economic ties and Chinese investments. Despite this, bilateral trade between India and China has now reached a record $130 billion.
Efforts to improve ties began after Prime Minister Narendra Modi met Chinese President Xi Jinping in Kazan, Russia, in 2024. Shortly before this meeting, troops from both countries had withdrawn from the Line of Control. Following the summit, both nations agreed to resume direct flight services and the Mansarovar pilgrimage. Later, PM Modi visited China to attend the SCO Summit. Recently, China also supported the declaration issued at the AI Summit held in India. These steps reflect a series of confidence-building measures taken by both countries to restore trust.
In the context of Chinese investment, the Indian government had issued an order on March 23, 2022. It stated that any investment coming from countries that share a land border with India would require approval from the Indian government. The rule was widely seen as targeting investments from China. At that time, tensions between the two countries were at their peak along the Line of Actual Control (LAC).
Improvement in relations since 2024
Efforts to improve relations began in 2024 after Prime Minister Narendra Modi met Chinese President Xi Jinping in Kazan, Russia. Just before this meeting, troops from both countries had withdrawn from the LAC. After the meeting, the two sides also agreed to resume direct flight services and the Mansarovar pilgrimage.
Later, PM Modi visited China to attend the Shanghai Cooperation Organisation (SCO) summit. The summit took place after the Pahalgam attack and Operation Sindoor. In the joint statement issued after the summit, terrorism was strongly condemned. This was seen as a major diplomatic win for India because the statement came from China, although Pakistan was not mentioned directly.
Recently, China also supported the declaration issued at the AI Summit held in India. These steps show that both countries are making efforts to rebuild trust and improve relations.
