New Delhi (NVI): In signs of thaw in the strained bilateral relations, India has reportedly started lifting a nine-month freeze on Chinese investments by clearing Foreign Direct Investment (FDI) proposals from that country, coinciding with the military disengagement process underway at the Line of Actual Control (LAC).
Considering the Chinese FDI proposals on a case-by-case basis, the government has already given approval to some smaller investments while the bigger ones are being subjected to further scrutiny and examination, according to reports and people in the know.
These include the proposals, mostly in non-sensitive sectors, which were delayed or suspended after China launched military aggression on the LAC in Eastern Ladakh sector in May last year.
Along with fresh investments in existing projects, inflow of funds may also be considered through the automatic route in some sectors. According to reports, investments for stakes of up to 20 percent in “non-sensitive” sectors may be through the automatic route.
The Chinese military action of last May, aimed at altering the LAC, led to intense tensions between the two countries. At one point of time, each country had about 50,000 troops, along with fighter planes, missiles and tanks, deployed along the LAC in eyeball-to-eyeball situation.
The possibility of a full-fledged war loomed large, especially after the troops of the two countries had a physical clash in Galwan Valley on June 15 last year, which resulted in the killing of 20 Indian soldiers and unspecified number of Chinese soldiers.
As tensions rose on the border, India decisions to hurt China economically. It placed curbs on Chinese investments, scrapped projects which had Chinese investments and banned hundreds of Chinese mobile Apps.
These measures did have impact, with the quantum of funds from China dropping substantially.
According to Venture Intelligence, which tracks private company financials, transactions, and their valuations in India, private equity and venture capital funding from funds based in China and Hong Kong witnessed a significant drop from 3.5 billion dollars in 2019 to 1.05 billion dollars in 2020.
Meanwhile, the Opposition Congress took a dig at the government for its move on easing Chinese FDI.
“ATAMNIRBHAR BHARAT ON CHINESE MONEY. DISENGAGEMENT IS STILL NOT OVER & RED CARPET IS BEING ROLLED OUT FOR THE CHINESE. THE DEAL SEEMS TO HAVE HAPPENED ELSEWHERE TIMOTHY! After 9-month freeze, Centre starts clearing China FDI plans,” Congress MP and spokesman Manish Tewari tweeted.
