Commerce and Industry Minister Piyush Goyal has confirmed that the government will not change its policy on foreign direct investments (FDI) from China. This decision comes despite recent suggestions from the Economic Survey.
Goyal stated that the ideas presented in the Survey are not binding on the government. “There is no rethinking at present to support Chinese investments in the country,” he said.
In 2020, the government mandated approval for FDI from countries sharing land borders with India—such as China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.
Goyal’s comments followed a proposal in the pre-Budget Economic Survey on July 22, which suggested encouraging Chinese FDI to boost local manufacturing and expand exports.
China’s contribution to India’s total FDI inflow from April 2000 to March 2024 is just 0.37% ($2.5 billion). Relations between India and China have been strained since the Galwan Valley clash in June 2020, which led to a military standoff and the banning of over 200 Chinese apps in India.
Despite the limited FDI from China, trade between the two countries has grown significantly. China was India’s largest trading partner in 2023-24, with total trade reaching $118.4 billion. India’s exports to China increased by 8.7% to $16.67 billion, while imports rose by 3.24% to $101.7 billion, resulting in a widened trade deficit of $85 billion.
China has been India’s top trading partner for several years, except for brief periods when the UAE and the U.S. held the position.
In addition to addressing Chinese investments, Minister Goyal called on industry participants to help reduce compliance burdens and to use the ₹1 lakh crore ‘Anusandhan Fund’ for private-sector research and development. He also announced plans for 12 new industrial parks and several mega textile parks across the country, urging Indian investors to support startups and MSMEs by taking advantage of government benefits.