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Chinese investors perplexed by India’s all-new foreign investment conditions

India's plan to screen every foreign direct investment from the neighboring countries is a hindrance to the Chinese firms.
India’s plan to screen every foreign direct investment from the neighboring countries is a hindrance to the Chinese firms.

The all-new rule to screen foreign direct investment is proving to be problematic to the Chinese investors as the scrutiny will affect their delay deals and projects in the investment markets.

Why this sudden change in policy?

These reformation of rules are not a surprise as many other countries are also attentive and on guard against sales of corporate assets in these pandemic times.  But, unlike neighboring countries like Bangladesh, Pakistan, Nepal, etc. China has significant investments in India.

The current Chinese firm planned investments in India are now more than $26 billion. This proves that the world’s second most populated country is emerging as a revolutionary market, from automobiles to tech.

Chinese automobile companies like Great Wall Motor and MG Motor have high hopes for India. In contrast, the tech and marketing giant, Alibaba, has invested in the growth of digital payments like Paytm, BigBasket, and Ola.

After the reformation of rules, a few Chinese investors have already stopped the exchange and are further awaiting confirmation from the government.

This will significantly impact India’s digital businesses who are currently facing a shortage of funds due to COVID-19.

MG Motors and Great Wall are worried about the policy and other future investment plans in India. This could prove to be a bit troublesome to them as MG Motors had just released its models in India last year. The company had to invest $650 million to make its permanent mark in India.

The famous Indian craft beer brewing company, Bira, is also facing trouble due to the shortage of funds.  India’s industries ministry is reviewing a large number of queries regarding the reformation of the rules, and the reply and confirmation not yet seen.

This policy further risks the relations between India and China, which was festering even before the Coronavirus pandemic.

The companies have faced many allegations from the olden times, stating that Chinese products are inferior and don’t last. The pandemic and the change in policy will worsen these accusations further.