China has made it clear that it will not take things lying down regarding India’s amendments to Foreign Direct Investment (FDI) rules, and stressed that this was a violation of World Trade Organisation (WTO) rules. India should be bound to persist with its present stand – that all FDI proposals from neighbouring countries should now get clearance from the Union Commerce Ministry. Retracing back at this juncture, under pressure from China, can grievously hurt India in the near future.
Without doubt, China was obviously in focus when Rahul Gandhi first suggested this a few days ago and when this change was brought about by government two days ago. This was done on the same lines as some European nations have done in the wake of a Chinese attempt to invest and acquire industries that have fallen sick in the backdrop of the COVID-linked lockdown and economic downturn at the global level, and also at the levels of individual nations. India, for instance, has been going through a month-long shutdown and this is bound to have an adverse impact on the nation’s economy in general and industry, trade and commerce in particular.
China says the new rule introduced here violated principles of non-discrimination and undercut the concept of free and fair trade. The matter could open the door for a legal battle at the highest level. One comfort could be that India is not alone in stonewalling the Chinese attempt at poaching on business interests. China is on the defensive in relation to the spread of COVID-19. While it says the US military had planted the virus in Wuhan, President Trump feels China did it on the US to aggravate a health crisis there. The truth might never come out. With new issues overtaking the present concerns, in due course, attention could get diverted to other matters sooner than later. Yet the fact that coronaviruses are researched upon in China and that country has been known to have given birth to MERS and SARS has not gone unnoticed. Also, talk of international business ethics by China at this juncture in human history, somehow, does not sound too good.
The relations between India and China are not warm even as President Xi Jinping came calling on Prime Minister Narendra Modi twice since 2014 – first in Ahmedabad and then in Mahabalipuram near Chennai late last year, besides brief forays in Delhi as well. The Doklam stand-off in 2017 when Chinese and Indian soldiers came face-to-face over an alleged usurpation of Bhutanese land by PLA in an area close to the Indian border is fresh in mind. The matter was solved but no one in India truly knows what we lost. Chinese incursions into Indian border areas have occurred repeatedly, but arguments were that the borders were not well-marked and the incursions were accidental.
China has a habit of nibbling at the land of its neighbours, and showed a willingness often to step back when faced with resistance. Significantly, none of the flash points between China and India in recent times have spilt over the brim. This could mean the present issue about FDI too could be faced off and thwarted. The worse scenario is some kind of a business or diplomatic retaliation. China is already putting spokes in India’s wheels at world fora in matters like this nation’s proposed entry to the Nuclear Suppliers’ Group, and in relation to the protection China extended to leaders of some terror outfits when the matter came up at the UN.
China is facing a serious economic downturn in the context of the COVID-19 spread. This, thus, is no time for it to take matters to a head and try out an arm twisting method. India has gone out of its way to open up its markets for China, to an extent that local manufacturing sector is down in the dumps. Indian industry is failing to acquire dynamism of its own to at least progressively reverse the scenario and touch down at a level playing field. It is simply that a few corporates are growing, with fewer benefits to the nation in terms of employment generation or wealth creation.COVID-19 further dented the base of Indian industry, trade and commerce. Revival is a distant dream, even with the marginal government stimuli in place.
India needs to stand firm. Citizens at large must support the government at this time. Let the Government of India not roll back this wise and timely decision.