India might, in the coming weeks, give the go-ahead to some new investment proposals from China as icy relations between the Asian behemoths are thawing due to de-escalations at the border, according to a report by Hindustan Times.
Chinese state-run media had last week announced that both Chinese and Indian troops had begun disengagement in the Pangong Tso area, situated in the Ladakh region of the western Himalayas. The disengagement was planned after a consensus was reached during the ninth round of talks at the military commander-level.
The disengagement follows a nearly nine-month-long standoff after troops from the People’s Liberation Army (PLA) clashed with Indian soldiers at Galwan. Despite several rounds of disengagement talks at different levels, Chinese forces still remained in the Finger 5 area of the Pangong Tso lake.
Changes in foreign investment rules had hurt Chinese businesses
As tensions between the two nations peaked, India framed several policies targeting Chinese businesses and investments in India, such as banning dozens of Chinese apps, blocking China from participating in government tenders and compelling any Chinese company investing in India to seek approvals.
The changes brought about by the Indian government in the foreign investment rules mandate that investments from an entity in a country that shares a land border with India would require further government approval, markedly slowing investments flows from China.
This policy change had put in limbo over 150 Chinese proposals worth more than $2 billion, hurting the plans of Chinese companies in India.
One such proposal that was delayed was the acquisition of a General Motors plant in India by Chinese company Great Wall Motors.
“We’ll start giving approvals to some greenfield investment proposals, but we will only clear those sectors which are not sensitive to national security,” one of the officials said.
Earlier this year, a Chinese company was awarded a contract for a section of the Delhi-Meerut Rapid Rail Transit System (RRTS). The company had made the lowest bid in June last year for the project, but the contract was put on hold due to the border tensions. The National Capital Region Transport Corporation (NCRTC) awarded the contract for a part of the Delhi-Meerut Rapid Rail Transit System (RRTS) to the Shanghai Tunnel Engineering Company Limited. This Chinese company will build 5.6 km underground stretch between New Ashok Nagar and Sahibabad.
Last month, there was another face-off between Indian and Chinese soldiers at Nathu La. 20 Chinese soldiers were reportedly injured in the clash, while 4 on the Indian side sustained injuries.
Looking forward to more Chinese investment
The officials said that the ongoing discussions regarding the matter are private and did not give details of the proposals they plan to approve in the coming weeks. They added that the government will also look to clear some other brownfield projects – new investments in existing projects – that are not a risk to national security after the first round of clearance to new investments.
The government is reportedly also considering allowing some investment from Chinese firms in certain sectors via the “automatic” route, or without government scrutiny. The officials said that investments for stakes of up to 20%, in “non-sensitive” sectors, may revert to the automatic route for nations with which India shares land borders.
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