The union Finance Minister Nirmala Sitharaman also particularly wanted to add that while opening up for the FDI sector, the fundamental focus of the Indian economy will remain on its own security. During her speech at Wharton School, she pointed out that India’s regional complications, and the precaution which needs to be taken regarding foreign investment sources. Although she did not point to any country, her observations were significantly in tune with the official perception of the government on the need to protect nascent industries from FDI.
Sitharaman’s comments came after India and China came to some understanding to de-escalate in the latest standoff indicating that while geo-political changes are afoot, the government is clear that there will be no change on FDI policy let alone tightening same especially from China. At the advent of COVID-19, India changed its FDI policy and regulation for neighbors regarded as unfriendly towards India especially China. Some of these measures include banned Chines apps and restricting measures on visa processing, something that has received criticism from business people. But even here, Sitharaman signaled that these regulations will not liberalize soon, even though India needs more foreign investment.
India needs about $100 billion FDI every year, according to the report while in the previous year it was $71 billion. Sitharaman said that despite having opened the FDI channels, greater emphasis is required on compliance and state-level reforms.
For the Indian government, former Indian Ambassador to China Gautam Bambawale said that friendly and cautious approach towards Chinese investments should not send mixed signals. As a result Modise emphasised national security/economic policy coherence, especially in the aftermath of China tensions following the 2020 Galwan Valley incident. Speaking to media after the end of the customary Interactive Sessions, Commerce Minister Piyush Goyal clarified that the government has no plans to revise ongoing FDI policies which exist between India and China and reiterated the need to synergize economic growth with defensive measures. Even though China is India’s largest trading partner, telecommunications is effectively closed to Chinese investments.
