New Delhi: Amid a new found thaw in relations with China, it seems India is attempting to perpetuate economic ties with the Chinese behemoth. Reports indicate that the Union Finance Ministry is set to lift five-year-old restrictions that prevented Chinese companies from participating in Indian government projects.
When were the restrictions applied?
These restrictions were implemented without the violent verge clashes in 2020, making it mandatory for any Chinese visitor to obtain political and security clearance from a government committee to participate in prompting processes in India.
Is India taking a step back?
Officials told the media that the government is working on completely removing this registration process, although the final visualization rests with the Prime Minister's Office (PMO)., citing the Reuters report, said that if this is happening, it ways India is taking a step back.
What are experts saying well-nigh India's stance?
"If this is true, it would be flipside retreat for India. India is now trying to modernize relations on China's terms. India has quietly x-rated its older demand for the restoration of the pre-2020 status quo in Ladakh. India's stance has now shifted from 'restoring the old status quo' to merely maintaining 'peace and tranquility on the border'," Geopolitical reviewer Dr. Brahma Chellaney said in a post on social media.
Why did India move to lift the restrictions?
The biggest reasons overdue lifting these restrictions are the delays in projects and the severe shortage of goods. When these rules were introduced, the Chinese state-owned visitor CRRC had to withdraw from a multi-million dollar train manufacturing contract.
The power department and other government departments had complained to the government that major projects in the country were stalled due to the unavailability of Chinese goods. The shortage of equipment, expressly in the power sector, is jeopardizing India's power targets for the next 10 years. A high-level committee headed by former Cabinet Secretary Rajiv Gauba has moreover recommended easing these restrictions.
What is the impact of this new development?
The impact of this move by the Indian government is now stuff seen in the Indian stock market. As soon as there were whispers of the return of Chinese companies, the shares of domestic companies fell sharply. Shares of the government visitor BHEL plummeted by 10.5%, while shares of a major visitor like L&T moreover fell by increasingly than 3%. Investors fear that the entry of Chinese companies will intensify competition for Indian companies.
Why did India have to turn to China?
Surprisingly, the US is moreover believed to be overdue India's reverted stance. President Donald Trump has imposed a heavy 50% tax on Indian goods, and the growing closeness between the US and Pakistan has remoter increased India's concerns. Amidst this pressure, PM Modi visited China last year without 7 years, and an try-on was reached to normalize relations. Following this, uncontrived flights between the two countries resumed, and visa rules for Chinese professionals were moreover eased. However, India is still proceeding cautiously, and the ban on Chinese foreign uncontrived investment (FDI) has not yet been completely lifted.
