Economic reset? India examines step-by-step relaxation in trade with China

To ease economic restrictions on China, India is being examined at the highest levels, with any relaxation tied to reciprocal and calibrated steps from Beijing. The discussions are taking place against the backdrop of a rapidly changing global trade environment and the risk of more severe US tariffs.

Officials indicated that the approach being considered would be incremental rather than broad-based. India has already simplified the process of granting business visas to Chinese workers and is now reviewing whether some investment-related restrictions could also be eased.

“It (easing of norms for China) is being worked upon. It will take time, though. There has to be reciprocity. Earlier, flights were restored, visas were given, and entry norms were eased as we had to allow technicians for stalled projects, etc. So it will happen gradually,” an official said, the Indian Express reported.

Considerable groundwork has already been done. A high-level panel led by NITI Aayog member Rajiv Gauba had earlier proposed lifting restrictions on Chinese investments. In addition, the Economic Survey 2023-24 argued for attracting Chinese capital to boost India’s export competitiveness.

Stricter rules on Chinese investments

India imposed stricter rules on Chinese investments in April 2020 through Press Note 3, requiring government approval for investments from countries sharing land borders with India. The measure was introduced to prevent opportunistic takeovers during the Covid-19 pandemic and has remained in place amid heightened security concerns following the Galwan clash later that year.

To stabilise the broader relationship, a similar diplomatic approach was also adopted. This includes resumption of the Kailash Mansarovar Yatra; restoration of direct flights; issuance of visas for journalists and think-tank researchers, and the sharing of trans-border river data. Following the development, India responded that both sides had “reviewed the state of India-China bilateral relations comprehensively” and decided on “people-centric steps” aimed at stabilising and rebuilding ties.