India should be pragmatic about huge Chinese investments
Financial Times in an interview last week, “We are open to doing business with any company anywhere as long as they are investing and conducting their business lawfully and are in compliance with the Indian laws." He added, for good measure, that India was “open to all investments, including Chinese". That these statements were meant for consumption overseas is evident if one looks at the ground reality. China’s BYD Motors has become the latest casualty of India’s undeclared economic cold war with China.
The company has called off its plans to invest $1 billion in partnership with the Hyderabad-based Megha Engineering and Infrastructure to manufacture electric vehicles in India, after it was clear that regulatory approvals would not be forthcoming. BYD’s proposal ran afoul of a 2020 amendment to India’s foreign direct investment policy that made government approval mandatory for any investment originating from a country with which India shares a land border. Although India shares a land border with seven countries – Pakistan, Afghanistan, Nepal, Bhutan, China, Myanmar and Bangladesh – given the economic vicissitudes gripping six of them, the policy was clearly aimed at China.
That policy was the direct outcome of violent clashes between Chinese and Indian military forces along the border in Ladakh’s Galwan Valley and Pangong Tso Lake that year. The clashes, which India said were unprovoked and unjustified, led to heightened tensions between the two countries. India banned hundreds of Chinese apps, cracked down on Chinese businesses operating in India, and amended the investment rules to prevent the easy entry of Chinese investments into India.
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