NITI Aayog, has reportedly suggested a big change to the current rules on Chinese investments, according to a Reuters report. Right now, any investment by a Chinese company in an Indian firm, no matter the amount, needs security clearance from both the Home and Foreign Ministries—a process that’s caused major delays and stalled some big deals.
NITI Aayog now proposes letting Chinese companies buy up to a 24 percent stake in Indian firms without this approval. The goal is to boost foreign direct investment (FDI), which has dropped sharply in India—from almost USD 44 billion in 2021 to just USD 353 million last year. Restrictions put in place after the 2020 India-China border conflict have hit not only Chinese deals (like the USD 1 billion BYD electric car project that got shelved) but FDI in general.
Reuters reports that the plan is being looked at by several ministries and the Prime Minister’s office, but a final decision could take months. Some government departments support the idea, but other approvals are still pending.
This move comes as India and China try to smooth relations after recent military tensions, with diplomatic visits and talks about restarting direct flights. NITI Aayog has also suggested revamping the approval board for all foreign investments to speed things up.
