Friday, July 30, 2021

Friends Again: India, China ‘Back To Business’ As Two Neighbors Withdraw Troops From Disputed Border Points?

It seems India and China are now back to usual business. As the two countries withdraw their troops from the disputed border in eastern Ladakh, India is set to clear new investment proposals from China.

The details of the proposals are not yet known but there will be more clarity on the matter in the next few weeks.

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After a nine-month-long military stand-off, Indian and Chinese troops had begun the disengagement process along the Line of Actual Control last week, aimed at reviving the trade ties between the two neighbors.

News agency Reuters quoted government officials as saying that India would be soon clearing some investments from China. The official said: “We’ll start giving approvals to some greenfield investment proposals, but we will only clear those sectors which are not sensitive to national security.”

After the June 15, 2020, violent face-off between the Indian and Chinese troops in Galwan Valley, which resulted in the death of 20 Indian soldiers, the Indian government had tightened the noose around the Chinese investments by taking different measures.

India had made it mandatory for the investors from neighboring countries sharing a border with India to seek government approval for any investment.

The new foreign investment rule had resulted in over 150 proposals from China worth more than $2 billion hanging fire. Apart from the restrictions on foreign investments, India had blocked China from participating in government tenders and banned more than 100 Chinese apps, citing security reasons.

According to the officials, the government is now considering allowing some investment from Chinese firms in certain sectors via the “automatic” route, or without government scrutiny. Investments for stakes of up to 20%, in “non-sensitive” sectors, may revert to the automatic route for nations with which India shares land borders, the official told Reuters.

In January, the Modi government had awarded the contract to construct a stretch under the Rapid Rail Transit System (RRTS) in New Delhi to a Chinese company. It led to a huge backlash in social media. It is important to note that the trade ties between the two countries have been strained due to the border stand-off.

Among the many restrictions, India’s state-run telecom companies – Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) – had barred Chinese telecom equipment vendors from participating in their tenders.

While India is moving towards mending the ties with China, Indian analysts have raised a concern that New Delhi might have settled for less as the current disengagement is applicable to Pangong Tso only. They fear this has taken away the focus from other friction pints such as Hot Springs, Gogra, and Depsang.

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