India and China are reportedly exploring a new investment framework designed to facilitate business-to-business exchanges and accelerate Chinese investments. This initiative seeks to revive commercial ties between the two nations, signaling a potential thaw in broader diplomatic relations.
Potential Investment Package at BRICS Summit
Sources indicate that Beijing may unveil a substantial investment package for India during Chinese President Xi Jinping's visit for the BRICS summit, scheduled for September 12-13 in New Delhi. President Xi is expected to meet Prime Minister Narendra Modi, with groundwork for this high-level interaction laid during National Security Adviser Ajit Doval's recent visit to Beijing.
Key Proposals Under Discussion
- Special Economic Zones: Plans include establishing special economic zones offering easier access to sea routes for trade.
- EV Market Access: Greater market access for Chinese electric vehicle manufacturers, such as BYD, within India is a significant element of the discussions.
- Export Processing Zones: A proposal for Chinese-funded export processing zones in India aims to boost exports to third countries. Beijing is keen to announce investments, including in these zones, during President Xi's first visit to India since 2019.
While the overall investment package might not be exceptionally large, both sides are focused on a gradual improvement of relations and managing existing differences following a six-year period of strained ties.
India's Stance and Demands
India is also considering easing approval processes for Chinese investments in non-strategic sectors. However, strict restrictions will remain in place for projects along the Line of Actual Control, defence-related initiatives, and other sensitive areas.
New Delhi is actively seeking assurances from Beijing for smoother access to critical technology and raw materials, aiming to make these supply routes more predictable and strengthen access for Indian industries. Furthermore, India is pushing for increased Chinese investment and greater imports from China, particularly industrial goods, to help narrow the significant trade deficit between the two Asian giants.