Indian Defense Forum 
India wants to be China's gateway to the West
India is warming up to its northern neighbour. The South Asian country's annual economic report recommends courting investment from China rather than integrating into the country's supply chains. That lays out a way for companies from Shein to BYD to keep selling in Western markets despite rising suspicion towards the People's Republic. Much depends on how the Sino-American trade war plays out.
In the survey for the year ended March released on Monday, India's Chief Economic Adviser V. Anantha Nageswaran laid out the two options for the country to benefit from companies shifting supply chains out of China. He argues that it is more effective to encourage manufacturers from the People's Republic to set up factories in India and export to Western markets than to import China-made parts for assembly and re-export.
Betting on investments rather than low-value imports would help cut New Delhi's $85 billion annual trade deficit with its neighbour. It would also shield India against any future moves by Beijing to restrict exports of critical material.
Ideas floated in the survey do not necessarily translate into policy action. But the push for Chinese direct investment found an advocate in Finance Minister Nirmala Sitharaman on Tuesday, the first member of Prime Minister Narendra Modi's cabinet to back the idea. That statement is significant, coming four years after India stepped up scrutiny of investment from its neighbours following a skirmish with Chinese troops. Signs of a thaw are visible elsewhere, too.
Fast-fashion giant Shein, which is gearing up for an initial public offering in London, is partnering with $242 billion Reliance Industries to source merchandise from the world's fifth-largest economy. China's SAIC Motor formed a joint venture with JSW Group in March to build and sell electric cars in India.
Those are still exceptions, though. As of March 2023, 54 foreign direct investment proposals from entities based in China and Hong Kong were awaiting official approval. It's a reminder that parts of the Indian establishment are uncomfortable with opening the floodgates to Chinese capital. Beijing's level of comfort with companies investing in India, especially in strategic industries with potential for technology transfer, is unclear too.
More importantly, the US-China trade war is still in flux, and the upcoming presidential election in November adds to the uncertainty. At the very least, India's economic ambitions might offer a handy blueprint for the road ahead.
India is warming up to its northern neighbour. The South Asian country's annual economic report recommends courting investment from China rather than integrating into the country's supply chains. That lays out a way for companies from Shein to BYD to keep selling in Western markets despite rising suspicion towards the People's Republic. Much depends on how the Sino-American trade war plays out.
In the survey for the year ended March released on Monday, India's Chief Economic Adviser V. Anantha Nageswaran laid out the two options for the country to benefit from companies shifting supply chains out of China. He argues that it is more effective to encourage manufacturers from the People's Republic to set up factories in India and export to Western markets than to import China-made parts for assembly and re-export.
Betting on investments rather than low-value imports would help cut New Delhi's $85 billion annual trade deficit with its neighbour. It would also shield India against any future moves by Beijing to restrict exports of critical material.
Ideas floated in the survey do not necessarily translate into policy action. But the push for Chinese direct investment found an advocate in Finance Minister Nirmala Sitharaman on Tuesday, the first member of Prime Minister Narendra Modi's cabinet to back the idea. That statement is significant, coming four years after India stepped up scrutiny of investment from its neighbours following a skirmish with Chinese troops. Signs of a thaw are visible elsewhere, too.
Fast-fashion giant Shein, which is gearing up for an initial public offering in London, is partnering with $242 billion Reliance Industries to source merchandise from the world's fifth-largest economy. China's SAIC Motor formed a joint venture with JSW Group in March to build and sell electric cars in India.
Those are still exceptions, though. As of March 2023, 54 foreign direct investment proposals from entities based in China and Hong Kong were awaiting official approval. It's a reminder that parts of the Indian establishment are uncomfortable with opening the floodgates to Chinese capital. Beijing's level of comfort with companies investing in India, especially in strategic industries with potential for technology transfer, is unclear too.
More importantly, the US-China trade war is still in flux, and the upcoming presidential election in November adds to the uncertainty. At the very least, India's economic ambitions might offer a handy blueprint for the road ahead.
