Covid-19 and Global Politics: How is India stopping China from FDI?

In the midst of the new corona virus epidemic, when a Chinese bank bought a 1.01 percent stake in an Indian company, the Indian government became very worried.

Now India has changed its foreign direct investment policy. So that Chinese companies cannot increase their stake in India's business institutions.

As expected, China's decision to change India's FDI policy has been discriminatory. The Chinese Embassy in India said that China's investments in India always encourage industrial development of India.

Chinese Embassy spokesman Ji Rong, through a tweet, urged the Indian government to "change this discriminatory practice in trade and work to promote a fair, transparent and equal opportunity business environment".

Covid-19 created an atmosphere against China in India

According to the new rules of foreign direct investment made by the Government of India, the countries whose land borders meet with India, if they invest in any business or company of India, then it will be necessary to get the approval of the Government of India. Earlier this restriction was applicable only to investors from Pakistan and Bangladesh who invested in India.

India's media reported that China's People's Bank of China has increased its stake in Housing Development Finance Corporation Ltd. (HDFC), the largest non-banking institution in India, by 0.8 percent to 1.01 percent.

Many companies in India are weak

On 18 April, the Department of Industry and Internal Trade Promotion of the Government of India issued a statement in the press. On 19 April, the English Indian newspaper The Hindu had reported, quoting this statement, that the aim of this change in the policy of FDI is clear. We want to stop attempts by any foreign investor to take advantage of the Covid-19 epidemic by acquiring or taking possession of an Indian company.

According to this report, in the official statement of the Government of India, it was further stated that, 'If the ownership of an Indian company changes due to foreign direct investment by the neighboring countries of India in future also, the approval of the Government of India for the same Must be taken.

India's leading commercial English newspaper, The Economic Times, reported on April 20 that this change in India's foreign direct investment policy would also include those transactions with Indian companies in other countries, including China. Companies will join.

The Economic Times quoted an unnamed government official as saying, "If a company has invested in India and a Chinese company or institution invests money in that company's overseas branch, the Indian subsidiary of that company or The parent company will have to take its permission from the government.

The aim of this step of the Indian government is to rein in China's growing influence in its economy. At the same time, the ownership of weak Indian companies is to be prevented from going into the hands of Chinese institutions. Because of the worldwide Covid-19 epidemic, the lockdown imposed by India to prevent virus infection has weakened the situation of many companies in India.

Many Indian media institutions had also expressed apprehension that this change in the rules of FDI could have a bad effect on the relations between India and China. It is also feared that this step of India will have a bad effect on the investment of Chinese companies in India in future. Especially when China is claiming that many industries have grown rapidly in India due to its investment. Such as mobile phones, electrical household goods, infrastructure and automobile industry.

Will China's investment in India stop?

China has invested extensively in India. Research group Brookings India released a study report in the month of March. India's prestigious English newspaper, The Indian Express, quoted this report as saying that China's current and proposed investment in India has crossed $ 26 billion.

It was further stated in this report that Chinese companies often escape the scrutiny which companies of western countries investing in India usually have to face. While Chinese institutions have made many big investments and acquisitions in India.

The popular English newspaper The Mint reported on 19 April that in the post-Covid-19 epidemic, China's investment in India could be halted due to a change in the Indian government's policy of foreign direct investment. The Mint further wrote in its report that Chinese investors, such as Alibaba Tencent and Ant Financial, were behind 18 of the 23 Indian start-up companies worth more than $ 1 billion.

It was further stated in this report that these new rules of foreign direct investment will 'force Chinese investors to either postpone or further cancel plans for further investment in India. This can also happen with companies in which Chinese companies have promised investment.