From the Viewsroom

China can’t go off the table

Paran Balakrishnan | Updated on February 23, 2021

India must decide the new rules for trade and business

For starters, let’s be clear on one matter: India-China relations will take years to mend. The soldiers aren’t eye-balling each other by Pangong Tso but the trust factor’s plunged to the depths of that high-altitude lake. But we need to restore trade and business to some level of normalcy and the government’s seeking to decide the new rules of the game and how fast to go. One thing seems already assured: online will be the line-in-the-sand.

Don’t expect to see TikTok back in India because anything data-related will be off the table. Huawei? Also unlikely. When the Ladakh stand-off began, an estimated 150 investment proposals worth $2 billion were in the pipeline. The government’s inclined to green-light most manufacturing projects of which the most high-profile were from Chinese auto giants Great Wall Motors and SAIC. Also, Chinese money and firms will almost certainly be welcomed back for infrastructure projects like metros especially if they’re part of consortiums. What’s more uncertain is how Chinese companies will regard India now. India has 30 “unicorn” start-ups worth $1 billion and it’s thought 18 have Chinese investment. In 2019, Chinese investors pumped $3.9 billion into Indian firms. Among the biggest investors are companies like Tencent with its stakes in PayTm and Ola. Existing investments will stay but new ones look less certain. India, though, may ease up on component imports, especially in the automotive sector where it’s experienced heavy pushback because even foreign corporations with Indian plants have had difficulty importing.

Keep in mind that all along, trade and business didn’t stop altogether. Chinese cinemas aren’t showing Indian movies but Beijing quietly bought our rice. Also, the Chinese have been big buyers of our iron ore. China’s the world’s “factory” and we can’t afford to not buy from them but we must advance cautiously. As the Chinese have shown with Australia, they’ll use trade as a weapon so we must keep building our own capacity. We need to find a trading modus vivendi, but it must be one that doesn’t leave us vulnerable.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on February 23, 2021
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.