To match China’s economy, India must accept its investment
Although President Xi Jinping and Indian Prime Minister Narendra Modi shared a brief exchange last week at the Shanghai Cooperation Organisation summit in Bishkek, Kyrgyzstan, the real action will unfold later this week at the Brics summit when Xi arrives in New Delhi with an expected delegation of 400 officials. China is one of India’s top trading partners, yet it remains unclear whether Chinese…
President Xi Jinping and Indian Prime Minister Narendra Modi caught up briefly at the recent Shanghai Cooperation Organisation summit in Bishkek, Kyrgyzstan. However, the upcoming Brics summit in New Delhi offers a more significant opportunity for the two nations. With an expected delegation of 400 officials, China is poised to deepen its relationship with India, despite the divergence in their trade and investment relationship.
While China remains one of India's top trading partners, Chinese investments in the country have dwindled from US$705 million in 2015 to a mere US$6.5 million last year. This disparity is fueling India's trade deficit with China and inhibiting India's pursuit of economic sovereignty. India must reconsider its restrictions on Chinese foreign direct investment (FDI) to tap into China's manufacturing prowess, much like how China has used foreign investment to fuel its economic growth.
By creating tech zones modeled after China-Singapore's Suzhou Industrial Park, India can overcome regulatory hurdles and attract FDI. China's collaboration with Singapore has proven instrumental in attracting significant investment to Suzhou. Additionally, leveraging China's expertise in green energy and high-speed rail could help upgrade India's infrastructure, similar to East Asia's rapid development driven by Chinese investments.
Historical examples, such as Japan's investment in post-war Japan and South Korea's acceleration of industrialisation through Japanese investment, demonstrate that pragmatic cooperation over nationalism can lead to long-term success. China's industrial growth, particularly in sectors like electric vehicles and robotics, showcases its potential to contribute to India's economic development.
Despite historical enmity, China's investment in India should not be stifled due to a lingering sense of animosity. Instead, India should strategically embrace China's FDI to achieve broad-based economic development and industrialisation, as it has proven effective for other developing nations.
Written by urgent.news from Reuters Business via SCMP's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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