Context:
India is considering a “graded” or calibrated reopening of economic engagement with China, subject to reciprocal actions by Beijing, amid evolving global trade dynamics and domestic manufacturing needs.
Key Highlights:
- Background of Restrictions
- In April 2020, India issued Press Note 3, mandating government approval for investments from countries sharing a land border with India.
- The move followed:
- COVID-19 pandemic concerns (to prevent opportunistic takeovers).
- Galwan Valley clash (2020) and national security concerns.
- Visa issuances to Chinese nationals fell sharply from ~2 lakh (2019) to a few thousand (2024).
- Recent Easing Measures
- Resumption of tourist visas for Chinese nationals.
- Easing of business visa norms, especially for skilled technicians.
- Launch of a dedicated portal for fast-tracking short-term business visas.
- DPIIT allowed Indian firms to issue sponsorship letters under e-Production Investment Business Visa (e-B-4) framework.
- Discussions on restoring direct flights and resuming Kailash Mansarovar Yatra.
- Policy & Strategic Considerations
- A NITI Aayog-led committee recommended removal of certain curbs.
- Economic Survey 2023–24 advocated attracting Chinese investments to boost export competitiveness.
- Context of shifting global trade patterns and possible US tariff pressures.
Relevant Prelims Points:
- Press Note 3 (2020):
- Issued by DPIIT.
- Applies to investments from countries sharing a land border with India.
- Aimed at preventing hostile takeovers during COVID-19.
- NITI Aayog:
- Established in 2015, replacing Planning Commission.
- Functions as the premier policy think tank of India.
- PLI Scheme (Production Linked Incentive):
- Provides financial incentives to boost domestic manufacturing.
- Focus sectors include electronics, pharmaceuticals, telecom, etc.
- Galwan Valley Clash (2020):
- Triggered heightened scrutiny of Chinese investments.
- Visa categories relevant to foreign professionals:
- e-Business Visa (e-BV)
- e-B-4 under PLI-linked framework
Relevant Mains Points:
GS 2 – India-China Relations
- Reflects shift from security-dominated approach to pragmatic economic recalibration.
- Balancing strategic autonomy with economic necessity.
- Reciprocity-based engagement aligns with principles of mutual respect and sensitivity.
GS 3 – Economy
- Chinese capital and technical expertise critical in:
- Electronics
- Renewable energy components
- Automobile and semiconductor supply chains
- Could enhance:
- Export competitiveness
- PLI output efficiency
- Integration into Global Value Chains (GVCs)
- Risk factors:
- National security concerns.
- Trade imbalance (China is India’s largest import source).
- Overdependence in critical sectors.
- Way Forward
- Adopt a sector-specific, risk-calibrated investment screening mechanism.
- Strengthen national security vetting for sensitive sectors.
- Promote diversification of supply chains alongside selective engagement.
- Maintain diplomatic dialogue mechanisms to ensure reciprocity and trust-building.
- Align economic policy with Atmanirbhar Bharat and global integration goals.
UPSC Relevance:
International Relations (India–China ties), Investment policy reforms, National security vs economic growth debate, Supply chain resilience, Global trade realignment.