Will India Ease Chinese Investment Rules? Niti Aayog Proposes 24% Stake Without Clearance

What Are the Proposed Relaxations?
Niti Aayog’s latest proposal suggests key changes to India’s foreign direct investment (FDI) policy concerning China:
24% Stake Without Clearance: Chinese investors may no longer need government approval for stakes up to 24% in Indian firms.
Faster Approvals: Currently, all Chinese investments require security clearance from multiple ministries, causing delays. The new rule could streamline the process.

Easing 2020 Restrictions: The proposal revisits strict rules imposed in 2020, when India mandated security checks for investments from neighboring countries.
Boost to Supply Chains: The Economic Survey 2024 supports this move, arguing it could enhance India’s role in global supply chains and increase exports.

Why Was This Policy Initially Tightened?
In July 2020, India introduced stricter FDI norms for countries sharing land borders (like China) due to:
National Security Concerns – Preventing hostile takeovers of critical Indian businesses.
Geopolitical Tensions – Rising border disputes and trade imbalances influenced the decision.
Protection of Local Industries – Ensuring Indian companies aren’t overshadowed by foreign entities.

Current Status & Government’s Stance
The proposal is under review by key ministries, including:
Finance Ministry
Commerce & Industry Ministry
Ministry of External Affairs
While no final decision has been made, External Affairs Minister S. Jaishankar recently discussed trade barriers with China, hinting at possible diplomatic easing.


Sample Questions & Answers (For Competitive Exams)
Q: What is Niti Aayog’s latest proposal regarding Chinese FDI?
A: It suggests allowing up to 24% stake without security clearance for Chinese investments.
Q: Why did India tighten FDI rules for China in 2020?
A: Due to national security concerns and geopolitical tensions.
Q: Which ministries are reviewing Niti Aayog’s proposal?
A: Finance, Commerce & Industry, and External Affairs.
Q: How could easing Chinese FDI benefit India?
A: It may boost supply chain integration and increase exports.
Q: What was discussed in S. Jaishankar’s recent China visit regarding trade?
A: Trade barriers, rare earth exports, and faster de-escalation at LAC.

Why Is This Important for Exams?
UPSC & PSC: Policies on FDI, India-China relations, and economic reforms are key topics.
SSC & Banking: Current affairs on FDI, Niti Aayog’s role, and government approvals are frequently asked.
KAS & State PSCs: Understanding India’s investment policies helps in mains and interviews.