India has closed its doors to Chinese foreign direct investment (FDI) following the border conflict at the Galwan Valley in Ladakh in 2020. This also applies to Chinese nationals working out of Taiwan, Hong Kong, and other nations. And the FDI approval history over the last three years reflects this.

Only three investment proposals from China or Chinese nationals have received approval from the Ministry of Commerce and Industry for 2022–2023 (FY23).

According to the data that is currently accessible, the agency denied 58 FDI applications between FY21 and FY23, a startling number. Ten applications were denied in the pandemic's first year, FY21. Rejections peaked at 33 the following year, an all-time high. Although the number fell marginally in FY23, the agency still rejected 15 applications.

Clearly, the trend shows how Chinese FDI has recently been the subject of increased scrutiny and concern. 14 FDI applications are now pending with the department.

The government mandated prior authorisation for foreign investments from nations that border India on land in 2020. Pakistan, Bangladesh, Afghanistan, China, and a few more nations fall within this category.

Although all of the adjacent countries must abide by this legislation, its main goal is to prevent any prospective aggressive takeovers of domestic enterprises by Chinese investors. In reality, after COVID, the market dropped severely, and many respectable businesses were on the market for a song. The action was also intended to reduce the presence of Chinese businesses in India.

People with knowledge of the situation claim that the government is requesting Indian equity partners with a controlling interest from Chinese automakers and mobile phone firms. The Indian division of Shanghai-based SAIC Motor, MG Motor India, has launched a five-year plan to "Indianise" its operations.

The firm intends to enhance its local presence as part of this strategy, particularly by procuring as much as possible from the local market. In reality, Sajjan Jindal-led JSW is in talks with MG Motors to see whether a majority interest may be acquired.

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