India must avoid creating hurdles to Chinese investment

Blanket rules on screening will deter investors

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On April 18, in the middle of its nationwide lockdown, the Indian Ministry of Commerce announced that, henceforth, all entities from countries that share a land border with India would need government approval before they can invest in an Indian company. They can no longer go through the so-called "automatic route", under which investment in most areas is not subject to prior scrutiny.

Investments from Pakistan and Bangladesh already require government approval. And India hardly gets any investment from Nepal, Bhutan or Afghanistan, with which it also shares land borders. So it would appear that the thinly veiled Indian directive was targeted mainly at China.

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A version of this article appeared in the print edition of The Straits Times on May 13, 2020, with the headline India must avoid creating hurdles to Chinese investment. Subscribe