India-China Trade: The Economic Survey presented two days ago advocated normalizing trade relations between India and China. Now its effect is also visible. In the coming days, India may relax the restrictions imposed on Chinese investment in insensitive sectors like solar panels and battery manufacturing.
India lacks expertise in solar panels and battery manufacturing, which is not promoting domestic manufacturing. Reuters has quoted two government sources in a report that India can give green signal to Chinese investment in solar panel and battery manufacturing.
There has been tension between the two countries since the clash between Indo-Chinese soldiers in the Galwan Valley in 2020. After that India increased the strictness on Chinese investment. But now the government is preparing to relax the strictness in some sectors which are less sensitive in terms of security in terms of Chinese investment. However, strictness on Chinese investment will continue in the telecom and electronics sectors. According to a Reuters report, this will be the biggest and first attempt to normalize relations between the two neighboring countries after 2020. Reuters reported that no response has been received even after requesting comment on this from the Prime Minister’s Office, Ministry of External Affairs, Ministry of Finance, Ministry of Home Affairs and Ministry of Commerce."text-align: justify;">Earlier, in the Economic Survey presented to the Parliament on 22 July 2024, a whole chapter has been written on India-China trade relations. In the survey, Chief Economic Advisor V. Anantha Nageswaran has suggested to the government that India should include itself in China’s supply-chain or attract foreign direct investment from China to increase its global exports. The survey said that China has a monopoly in the production and processing of Critical and Rare Earth Minerals. This may also have a bad effect on India’s renewable energy program because India is dependent on imported raw materials for renewable energy."text-align: justify;">According to the Economic Survey, attracting foreign investment from China will help the US increase exports from India as East Asian countries have done in the past. The report said that attracting FDI is more beneficial than relying on trade. This will help India reduce the trade deficit with China, which is the largest exporter to India.
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