FDI from China: From Thailand to Brazil, global lessons for India’s cautious playbook
trade deficit of nearly $100 billion with China. Local production funded by FDI could substitute a part of these imports.Second, net FDI inflows have fallen significantly in recent years, making new sources of capital increasingly valuable.Third, the Israel–Iran war has once again exposed India’s energy vulnerabilities.
While India has little choice but to import crude oil and gas, it can partly offset this dependence by attracting foreign capital into strategic sectors.India’s approach remains cautious—perhaps inspired by the European playbook.Earlier this month, the European Commission proposed the Industrial Accelerator Act, which seeks to impose strict conditions on investments exceeding €100 million in strategic sectors when they originate from a single country controlling more than 40% of global manufacturing capacity.The regulation clearly targets China, much like India’s Press Note 3 and its partial relaxation. The proposed rules include requirements such as majority EU shareholding, technology transfer commitments, integration into EU value chains and local job creation.These safeguards are designed to slow Chinese outward direct investment (ODI), which expanded rapidly until 2017 before facing scrutiny from the US and its allies.India has historically received very little Chinese investment.
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