India's new policy on FDI and its impact on Chinese investment.
India last month introduced stricter rules for investment from bordering countries, saying it wanted to prevent “opportunistic” takeovers and acquisitions at a time when the COVID-19 pandemic is bringing down the share value of major Indian companies. The move, notified under the Foreign Exchange Management Act, was almost certainly made with China in mind. China is one of India’s fastest-growing sources of foreign direct investment (FDI).
Chinese manufacturers will favour investment in certain South-east Asian countries rather than India in the short term.
India may fast-track Chinese investment in infrastructure while putting those in fintech under greater scrutiny.
Once the pandemic crisis dissipates, India will roll out ambitious plans to attract foreign factories relocating from China.
