Following the Money: China Inc's Growing Stake in India - China Relations ; Brookings India Impact Series ; No. 032020-01

In: http://hdl.handle.net/11540/11668

Abstract

The growth of Chinese investments into India since 2014 has changed the nature of what has been a largely transactional trade relationship. Chinese companies are emerging as prominent players and investors, in areas ranging from infrastructure and energy to newer sectors of interest such as technology startups and real estate. Drawing on a range of sources, this paper aims to provide a more complete picture of Chinese investment in India today. The total current and planned Chinese investment in India has crossed US$26 billion at present. This growth in investment has several implications for the India-China relationship. For the first time, Chinese companies are seeking to establish a long-term presence in India, and their acquisitions in Indian companies give them an enduring stake in the Indian market. The changing nature of India's trade and investment relations with China will necessitate a new method and pattern of engagement from New Delhi, especially with the private sector in China and provincial governments that have emerged as important interest groups in shaping China's diplomacy with India. The influx of Chinese investment also poses particular challenges for India's regulation of foreign investment, underlining the need for a transparent, credible and predictable regulatory framework that strikes a better balance between creating a friendly, open and predictable investment environment on the one hand, and safeguarding longer-term considerations of security and privacy on the other.