(Bloomberg) — India’s cabinet has relaxed investment rules for Chinese firms, an official said, marking a shift in New Delhi’s stance toward its biggest neighbor and geopolitical rival.
A panel of ministers approved changes to the so-called Press Note 3 rules at its meeting on Tuesday, said an official with direct knowledge of the matter, who asked not to be identified because the matter is not public. A government spokesman could not immediately be reached for comment.
Press Note 3 was introduced in April 2020 to tighten controls on investment from countries that share a land border with India, amid deteriorating relations with China that culminated in a deadly clash in the Himalayas later that year. China was not named in the directive, but the rules were widely seen as targeting Chinese capital as tensions rose between the two Asian rivals.
The release from Prime Minister Narendra Modi’s administration points to improved economic ties between India and China as both countries explore a limited diplomatic reset. By relaxing investment rules, New Delhi is trying to attract more capital and boost growth at a time when war in the Middle East and higher oil prices are creating new economic challenges.
Relations between India and China have begun to thaw recently as global trade tensions have intensified following US President Donald Trump’s tariff measures, which have raised concerns about supply chains.
Now New Delhi is cautiously reopening its doors to China. Flights between the two countries have resumed and regulators are approving selected investment proposals. Indian electronics firm Dixon Technologies India Ltd. said this week that it had received federal approval for a venture with China’s HKC Overseas.
Chinese consumer electronics brands including OPPO and Vivo already rank India among their most important markets, while automaker BYD Co. Ltd. is expanding its presence in electric vehicles and batteries. Easing investment restrictions could help such firms deepen local manufacturing partnerships and tap demand in the world’s most populous country, even as New Delhi continues to balance economic priorities with strategic concerns about Chinese influence.
