New Delhi : India’s cabinet relaxed investment rules for Chinese firms, an official said, marking a shift in New Delhi’s stance toward its largest neighbor and geopolitical rival.
The panel of ministers approved the changes to the so-called Press Note 3 rules at its meeting on Tuesday, an official with direct knowledge of the matter said, asking not to be identified as the matter is not public. The move to relax rules was first reported by the Press Trust of India.
A commerce and industry ministry spokesman denied the development.
The Press Note 3 was introduced in April 2020 to tighten scrutiny of investments from countries sharing a land border with India amid deteriorating relations with China which culminated in a deadly Himalayan clash later that year. China was not named in the directive, but the rules were widely seen as targeting Chinese capital as tensions between the two Asian rivals rose.
The relaxation by Prime Minister Narendra Modi’s administration points to an improvement in India’s economic ties with China as both countries explore a limited diplomatic reset. By easing investment rules, New Delhi is trying to attract more capital and support growth at a time when the war in the Middle East and higher oil prices are creating fresh economic challenges.
Relations between India and China began to thaw recently as global trade tensions intensified following tariff measures from US President Donald Trump, raising concerns about supply chains.
Now, New Delhi is cautiously reopening its doors to China. Flights between the two countries have resumed, and regulators are clearing select investment proposals. Indian electronics firm Dixon Technologies India Ltd. said this week it had received federal approval for a venture with China’s HKC Overseas.
Shares of companies that could potentially benefit from Chinese investments and technology transfers gained after the report, with Dixon extending advance to 12%.
Chinese consumer electronics brands including OPPO and Vivo already count India among their most important markets, while automaker BYD Co. Ltd. has been expanding its presence in electric vehicles and batteries. Easing investment restrictions could help such firms deepen local manufacturing partnerships and tap demand in the world’s most populous nation, even as New Delhi continues to balance economic priorities with strategic concerns about Chinese influence.
This report is auto-generated from Bloomberg news service. ThePrint holds no responsibility for its content.
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