Increasing foreign direct investment from China in the domestic market may bring short-term benefits, but it poses long-term risks to India’s economic security and strategic autonomy. The Global Trade Research Initiative has warned that relying on Chinese firms for essential manufacturing capabilities could leave India vulnerable to supply chain disruptions and geopolitical pressures.
GTRI Founder, Ajay Srivastava, pointed out that Chinese companies investing in India may prioritize their own supply chain efficiencies, potentially sidelining local industries and limiting opportunities for home-grown companies to thrive. He also expressed concerns that the employment opportunities created by Chinese firms may not meet expectations if they bring in their own staff, depriving the local workforce of benefits.
It is essential for India to enact policies that support local industry and create sustainable employment opportunities for its population. While Chinese investments may seem attractive in the short term, they could harm India’s long-term economic prospects and strategic independence.
The pre-budget Economic Survey has advocated for attracting FDI from China to boost domestic manufacturing and tap into export markets. However, amidst growing tensions with China, there are concerns that allowing Chinese firms to operate in India could overwhelm local industries, turning the country into a trading hub reliant on Chinese supplies.
The Economic Survey 2024 highlighted China’s dominance in the Indian market, with the country mentioned 132 times and its products discussed extensively. India must carefully navigate its economic strategy to balance short-term gains with long-term risks associated with Chinese FDI. India’s Net FDI Inflows Could Pick-Up This Fiscal After Decadal Low. Read more on Markets by NDTV Profit.
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