Opinion
Mint Quick Edit | Chinese investment could suit India
Summary
- The Economic Survey proposed welcoming FDI from China, but commerce minister Piyush Goyal’s Tuesday remarks suggest a change in India's position is unlikely. We need a wider policy debate on the survey’s proposal.
Advocacy of Chinese foreign direct investment into India by the Economic Survey notwithstanding, a change in India’s position seems unlikely. “There is no rethinking at present to support Chinese investments in the country," commerce and industry minister Piyush Goyal said on Tuesday, noting that the survey’s recommendations are not binding.
The current path of India-China trade ties could, however, augur poorly for India’s balance of trade, since it relies heavily on China for a variety of inputs and these imports are hard to abate. At the same time, Indian exports to China have not been able to make much headway.
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The imbalance may be partly due to Beijing’s hidden subsidies for businesses that leave others uncompetitive, but also because of a genuine Chinese edge that Indian manufacturers cannot replicate. In such a situation, it’s pragmatic to let Chinese firms manufacture locally what they sell here, rather than importing it.
This would draw in capital and create jobs. Also, it could serve India’s China-plus-one aims. It’s just that we must be careful about which sectors to open up. On balance, though, the survey’s China proposal warrants a closer look.
