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Budget 2024: Nirmala Sitharaman backs CEA's suggestion on more Chinese FDI into India
CEA Anantha Nageswaran said India could use Chinese FDI as a means of investment to boost exports to the US and other western markets.
Finance Minister Nirmala Sitharaman during a post budget press conference on Tuesday said that she doesn't disown the suggestion by chief economic adviser (CEA) to allow more Chinese foreign direct investment (FDI) in the country.
Mentioning that the chief economic adviser's office works at an “arm's distance”, Sitharaman said that it “doesn't mean I am disowning the suggestion.”
On Monday, the CEA said that India should focus on getting more FDIs from Communist-ruled China to boost exports to the United States and other Western countries. This way, he suggested, would help India to keep its growing trade deficit with Beijing under manageable levels. The advisor also stressed that Western companies are looking at alternate import avenues to reduce their dependence on Chinese manufacturing and India should aim to benefit from this.
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According to RBI data, India's net FDI inflow dropped by 62.17% to $10.58 billion during the financial year 2023-24. This marks a 17-year-low from $27.98 billion the previous year.
On the trade front, China emerged as India's top trading partner in 2024 according to data from Global Trade Research Initiative. Two-way trade touched almost $118 billion, with India's exports at only $16.67 billion, leaving New Delhi with a huge trade deficit of more than $100 billion.
Both India and China have been locked in a border standoff over China's transgressions across the Line of Actual Control in eastern Ladakh since 2020. The clashes left 20 Indian soldiers and at least four Chinese soldiers dead. Two nuclear-armed neighbours have been engaged in commander-level talks to defuse tensions and reduce the deployment of troops, but progress has stalled due to China's reluctance to restore status-quo at major points like Depsang plains and Demchok.
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As tensions soared, India tightened the scrutiny of Chinese investments in India and halted major projects. New Delhi has also virtually blocked issuing visas for Chinese nationals.
China has asked India to de-link the border dispute and focus on other areas of bilateral relations while New Delhi has emphasised that ties cannot be normal without 'stability' across the border areas.
(With inputs from Reuters)
