India Tightens Scrutiny on Chinese Investments Amid Rising Tensions

Increased Review of Chinese Investment Proposals

New Delhi: The Indian government is set to implement stricter evaluations of significant investment proposals from Chinese firms, potentially causing delays in the approval process for these projects, as reported by a media outlet.

This move follows China's backing of Pakistan amid recent terrorist incidents in Pahalgam and the subsequent 'Operation Sindoor'.

China has been providing diplomatic support to Pakistan, collaborating with Turkey and Bangladesh, and supplying military equipment that has been utilized against India.

The government is anticipated to enhance its examination of Foreign Direct Investment (FDI) proposals and joint ventures involving Chinese companies.

While new joint ventures may be introduced to navigate existing restrictions, pending applications and ongoing discussions could also experience setbacks, according to sources.

Several Indian firms are negotiating with Chinese companies for joint ventures in the electronics component manufacturing sector under the Production-Linked Incentive (PLI) scheme, which may face delays.

Among notable Chinese firms, Haier, a leading home appliances manufacturer, is considering a joint venture with the JSW Group, an Indian conglomerate, with a potential investment of ₹1,000 crore. This proposal is currently under government review.

At the UN Security Council's counter-terrorism committee #1267, China obstructed any reference to The Resistance Force, linked to the Lashkar-e-Taiba terror group, which claimed responsibility for the Pahalgam attacks on April 22.

China's Foreign Minister Wang Yi has called for an 'investigation' into the attacks, part of Pakistan's efforts to mitigate its involvement in cross-border terrorism.

In April 2020, India had already imposed restrictions on FDI from China, requiring these proposals to undergo government scrutiny on a case-by-case basis before receiving approval.

Chinese telecom giants like Huawei and ZTE were barred from participating in the 5G rollout in India due to national security concerns.

The Indian government has advised telecom companies to source equipment only from 'trusted sources' for network expansion.