Union Commerce and Industry Minister Piyush Goyal indicated recently that the Indian government may consider a review of the existing checks on Chinese Foreign Direct Investment (FDI). He emphasized that policies need to be adaptable to changing times and circumstances.

Since 2020, India has maintained a cautious stance on Chinese FDI, particularly after border clashes that year. The government mandated approvals for FDI from countries sharing land borders with India, including China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan. This policy shift led to a significant drop in Chinese FDI into India, plummeting from $1.6 billion to a mere $20 million.

Despite these restrictions, trade between India and China has continued to grow. In 2023-24, China was India's largest trading partner, 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.

Goyal's recent statement suggests a potential shift in approach, emphasizing the need to recalibrate policies based on current realities. He stated that India prioritizes its own interests and will adjust its policies accordingly. While there is currently minimal FDI from China, the government's stance could evolve.

The ongoing restrictions on Chinese FDI stem from concerns about national security, trust, and economic coercion. India's approach reflects a broader strategy of reducing dependency on China while promoting resilient supply chains and trusted partnerships. This aligns with India's push for strategic autonomy and stronger bilateral frameworks beyond adversarial regimes.

Previously, Goyal had affirmed that there would be no change in the government's policy on FDI from China, despite suggestions from the Economic Survey to encourage such investments to boost local manufacturing and expand exports. He clarified that the Economic Survey's recommendations are not binding on the government and that all Chinese investments are subject to thorough scrutiny.

The Economic Survey had proposed that encouraging Chinese FDI could be a way for India to benefit from the "China-plus-one strategy," as the United States and Europe shift their sourcing away from China. The survey suggested that instead of importing from China, having Chinese companies invest in India and then export products to these markets could be more effective.

However, Goyal has consistently emphasized that India's priority is to integrate its economy with developed nations that adhere to fair business practices and offer equal opportunities for investment. He has stressed the importance of reciprocity, mutual trust, and mutual benefit in all economic interactions.

India's approach to Chinese investment is complex, balancing economic opportunities with strategic concerns. While the government remains cautious, the possibility of reviewing FDI checks indicates a willingness to adapt to changing global dynamics and explore avenues for economic growth.