Commerce Minister Piyush Goyal on July 30 said that the Indian government is not rethinking its stance on foreign direct investment (FDI) from China, indicating that the country may continue to exercise increased scrutiny on investments from Beijing.
“It (Economic Survey) is the Chief Economic Adviser’s report, it is a report that always gives out new ideas. It is not binding on the government. And there is no rethinking on supporting FDI from China,” Goyal said.
Goyal is referring to a suggestion from Chief Economic Advisor Anantha Nageswaran’s Economic Survey 2023-24 pitching for more FDI from China.
The survey points out India’s ballooning trade gap with China and prescribes a shift to capital from the neighbouring nation to lower this import dependency.
India’s trade gap with China widened to $85 billion in the previous fiscal from $83.2 billion in 2022-23.
Nageswaran in his survey cites the experience of East Asian economies while prescribing for more FDI from China. This could boost Indian exports to the US, he added.
“Choosing FDI as a strategy to benefit from the China plus one approach appears more advantageous than relying on trade. This is because China is India’s top import partner, and the trade deficit with China has been growing,” Nageswaran added.
The discussion on allowing more Chinese FDI into the country comes at a time when India’s net FDI inflow has been falling.
As per the latest data from the Department for Promotion of Industry and Internal Trade (DPIIT), India’s net FDI inflows contracted 3.5 percent year-on-year in FY24 to $44.42 billion, the lowest in five years.