India’s measures against Chinese products and investment
India's measures against Chinese products and investment
India Defers Licensing Requirement for Chinese Imports, Impacting Trade and Investment Ventures
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New Delhi, Aug 5 (ANBLE) – In a surprising move, India announced last week that it would defer the imposition of a licensing requirement for imports of laptops, tablets, and personal computers by three months. This decision partially reverses the previous day’s announcement, which had caused concern and uncertainty in the market. While India has not explicitly stated that the new requirement is aimed at China, more than half of its roughly $10 billion annual imports of personal computers and tablets are Chinese-made.
Tensions between India and China
The recent deteriorating relations between India and China have played a role in these decisions. The tensions began in mid-2020 when Chinese and Indian troops clashed on their disputed Himalayan frontier, resulting in the death of 24 people. Since then, there has been an ongoing strain between the two countries. In response, India has taken several measures targeting Chinese trade and investment ventures over the past year.
Impact on Chinese Trade and Investment Ventures
The licensing requirement deferment is just one of the actions taken by India to address its trade imbalance with China. Here are some other significant instances where Indian measures have affected Chinese trade and investment ventures since 2020:
Investment Plan by BYD
China’s BYD (002594.SZ) informed its Indian joint-venture partner last month about its decision to shelve a $1 billion investment plan for building electric cars. The investment proposal faced scrutiny from New Delhi, prompting BYD to change its plans.
Great Wall Motor Investment Plan
Great Wall Motor (601633.SS) also faced regulatory hurdles last year when it attempted to invest $1 billion in India. Due to the failure to obtain necessary approvals, the company had to shelve its plans and lay off all its employees in India.
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Xiaomi Asset Freeze
India’s federal financial crime agency has frozen $670 million of Xiaomi’s (1810.HK) bank assets since last year. This has posed a significant challenge to the popular smartphone maker. The agency alleges that Xiaomi made illegal remittances to foreign entities in the name of royalties, although the company denies any wrongdoing.
Mobile Apps Ban
In its efforts to address data and privacy concerns, India has banned approximately 300 Chinese mobile apps. Among the popular ones affected is the battle-royale format game from Krafton Inc, a South Korean company backed by China’s Tencent. This move has impacted the gaming industry and raised concerns about the influence of Chinese tech companies in India.
New Investment Vetting Rules
India has pushed for stricter scrutiny of investments from companies based in neighboring countries, including China. The country has added an extra layer of vetting and security clearances to the investment approval process. This measure aims to stave off takeovers and investments by Chinese firms. However, the increased scrutiny has resulted in billions of dollars in proposed investments being stuck in the approval process over the last three years.
Addressing Trade Imbalance and Concerns
India’s decision to defer the licensing requirement for Chinese imports reflects its intention to balance trade relations and reduce the dominance of Chinese-made products in the Indian market. While the exact impact of these measures on trade and investment remains to be seen, India is taking steps to prioritize its economic interests and protect its domestic industries.
As the Indian government continues to address the trade deficit and promote local manufacturing, it is crucial for both countries to seek constructive solutions and maintain amicable relations. Balancing economic interests with diplomatic objectives will be key for a prosperous future between India and China.
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