India's FDI moves in corona times show nation warier of Chinese designs
Recent moves by Indian authorities clearly indicate a sense of suspicion via-a-vis motive behind Chinese investments
NEW DELHI: India’s tweaking of its foreign direct investment (FDI) rules to prevent Chinese companies from taking over Indian firms whose market values have dipped due to covid-19 related uncertainties is a firm message to China that New Delhi will take steps to protect its core interests while managing ties with Beijing, say analysts.
This is despite the steps taken by both sides in the past two years to stabilize ties rocked by a tense military standoff in 2017, they say. Ties will continue to be complex and challenging, especially in a world roiled by the novel coronavirus pandemic with New Delhi having to recalibrate its calculations vis a vis its northern neighbor, they add.
According to Srikanth Kondapalli, a professor of Chinese Studies at the New Delhi-based Jawaharlal Nehru University, the new FDI terms are a reiteration of India’s redlines for China in the bilateral relationship. Though these rules could be reviewed in the future, nevertheless it’s a clear statement that preventing the opportunistic takeover of Indian firms at a vulnerable moment “is a matter of national interest and we will protect our national interest," he said.
India is not alone in taking such measures, he said, pointing to several countries like Australia, Germany, France and the Czech Republic which have in recent weeks tightened their investment norms against the backdrop of the economic turmoil unleashed by the covid-19 crisis.
Kondapalli recalled that about a decade ago, India’s National Security Council Secretariat had red-flagged any potential investments coming in from China, Pakistan, Bangladesh and Taiwan. Owing to this, several proposals of investment by Chinese companies in India’s port sector were declined as were some in India’s border areas due to security considerations, he said.
In the past few years, India has seen an uptick in Chinese investments, mainly in fintech and e-commerce areas bringing the overall number to around $8 billion, he said. “What we have been looking for are investments in India’s manufacturing sector by China, and these have not come in," Kondapalli said. The message therefore seems to be that while India wants to have stable ties with China, with summits at the level of top leaders like the 2018 Wuhan meet and the 2019 Chennai meet happening, India will not cede ground on its core interests, he added.
India has had uneasy ties with China due to a long standing border dispute, a burgeoning trade deficit and Beijing’s special ties with Pakistan. New Delhi has always described its ties with Beijing as “complex" and “complicated" but the pandemic has compounded the situation further.
Former army lieutenant general S.L. Narasimhan, currently a member of India’s National Security Advisory Board, pointed to the relative stability in ties since the 2017 Doklam crisis between India and China due to high level engagement. When asked if China would see India’s move on FDI rules as hostile, Narasimhan said that Beijing was yet to react.“It is too early to predict (how things will turn out)," he said.
Former Indian ambassador to China Gautam Bambawale said ties between the two countries are becoming more complex. “Both countries will have to work towards managing the relationship which is becoming more complicated," he said, adding that areas of competition were increasing.
On the global front, “since the UN and its specialized agencies like the World Health Organisation have proved bankrupt and ineffective, global decision-making could now fall on smaller coalitions of like-minded countries," he said. This comment was in the backdrop of Beijing successfully warding off efforts at the UN level to look into whether China had tried to hide from the world the seriousness of covid-19 cases that first surfaced in the country in December. In this context, “India has the potential to play an important role in this new international order," Bambawale added.