Security agencies advise caution in blanket approval to Chinese FDI: Report

Despite restrictions imposed in 2020 and subsequent regulatory scrutiny, Chinese investments continue to flow into specific sectors

Security establishments in India have advised caution in case of blanket approval to foreign direct investment proposals from China, citing history of corporate behaviour of Chinese companies in the country.

According a report by The Economic Times, citing sources familiar with the matter, a suggestion has been made to implement a rigorous risk assessment framework before easing the restrictions imposed during the Covid-19 pandemic.

The Economic Times has learned that this proposal includes setting up of robust IT tools and databases for continuous review and monitoring of FDI from countries considered to be of concern. Sources highlighted the importance of a time-bound mechanism for processing cases once such a system is in place.

Stressing on the primacy of national security, sources cautioned against granting unrestricted FDI from these countries. They suggested that while desirable investments contributing to technological advancements and domestic value addition should be welcomed and approved, a balanced approach was necessary.

Despite restrictions imposed in 2020 and subsequent regulatory scrutiny, Chinese investments continue to flow into specific sectors, sources told ET. They also insisted that enhancing the investment climate requires not only improving pre-entry mechanisms but also providing support to investors in establishing their operations after bringing in funds.

The deliberations underscore India's cautious stance on FDI approvals from China, reflecting ongoing efforts to balance economic interests with national security imperatives.