The ministry of commerce and industry has told the home and external affairs ministries to formulate a clear strategy on China and clarify the sectors and regions where Chinese investment is perceived as a security threat. The remaining sectors, according to the commerce ministry, should be thrown open for Chinese investment with a clear policy.
A source related to the development told The Indian Express that the commerce ministry has asked the two ministries to “work in tandem and allow Chinese investors in sectors where there are no security concerns and if need be, region-wise, so that India can attract investments”.
The source said that due to lack of clarity on investment from China, only $313 million has found its way into India between April 2000 to April 2014, which is abysmal compared to countries like the UK, which has pumped in over $20 billion and the US, which has invested over $12 billion during the same period.
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The move will go a long way in narrowing the huge trade deficit India faces with China. While exports to China were $14.82 billion in FY14, a mere 4.72 per cent of total exports, imports stood at $51.04 billion, leaving a trade deficit of over $36 billion. Earlier, the two countries had set a target of $100 billion by next year, which given the current situation, looks unlikely.
“Chinese have shown great interest in developing India’s infrastructure like high-speed railways, roads, power, and telecom. They are also interested in chemicals and plastics sector. If there is a clarity on views from all the departments, the commerce department can accordingly facilitate,” the source said.
Commerce and industry minister Nirmala Sitharaman, who visited China last month, called for increased investments from the country and signed a MoU on industrial parks, a development that will help in attracting Chinese investments in India.
During the UPA-II goverment, in response to the ministry’s proposal of FDI in railways, the home ministry had flagged concerns that Chinese investment could be a threat to security. Also, it had said that such investments should not be allowed in border regions such as Jammu & Kashmir and the North Eastern states.