No change in India's China FDI policy, clarifies Piyush Goyal
Union Commerce Minister Piyush Goyal said the government will not revise its stance on foreign direct investment (FDI) from China. This statement was made in response to Chief Economic Advisor Anantha Nageswaran's suggestion in the Economic Survey 2023-24, which advocated for increased FDI from China. The survey highlighted India's escalating trade deficit with the country, and proposed a shift toward capital from the neighboring nation to mitigate this import dependency.
Trade deficit and Chinese FDI: A closer look
The trade deficit between India and China has risen to $85 billion in the last fiscal year, from $83.2 billion in 2022-23. Nageswaran cited the experience of East Asian economies as a reason for encouraging more Chinese FDI, stating it could boost Indian exports to the US. "Choosing FDI as a strategy to benefit from the China plus one approach appears more advantageous than relying on trade," Nageswaran said.
India's net FDI inflow sees a decline
The debate over increasing Chinese FDI coincides with a period when India's net FDI inflow has been on the decline. Recent data from the Department for Promotion of Industry and Internal Trade (DPIIT) shows that India's net FDI inflows, contracted by 3.5% year-on-year in FY24 to $44.42 billion, marking the lowest level in five years. This trend underscores the significance of discussions around foreign investments and their potential impact on India's economy.
