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No economic quid-pro-quo with China; no fast-tracking of FDI, says senior cabinet minister

No economic quid-pro-quo with China; no fast-tracking of FDI, says senior cabinet minister

  • India has not promised any economic favor or quid-pro-quo nor any assurance or action to fast track Chinese FDI after disengagement in Pangong Tso by Chinese and Indian militaries
  • Earlier it was believed that this was not the case as there were three clearances given to FDI proposals from Hong Kong in the first week of February after having kept all such approvals in abeyance since April last year
  • However, two of those (Nippon Paints and Citizen Watches, both listed on the Tokyo Stock Exchange) are Japanese investments routed via Hong Kong. The third Netplay Sports is an FDI from Hong Kong from a promoter of Indian origin

New Delhi: Earlier there were news reports that in the aftermath of synchronized de-escalation and disengagement in the Pangong-Tso lake area between the militaries of Indian and Chinese military, India will overturn its economic sanctions and steps against the communist country, which the former had taken in the aftermath of the Galwan Valley clash that was initiated by the Chinese People’s Liberation Army in the summer of 2020. From the country-wide ban on Chinese apps to stalling Chinese-funded infrastructure projects in the country, India took multiple economic retaliatory steps against China in order to unequivocally express its displeasure over China’s violation of border agreements and its attempt to change the status quo along the LAC.

Galwan Valley Clash

The root cause of the conflict is the loosely defined 3,440 km long border between India and China, translating into a Line of Actual Control (LAC) at certain places and an international border at other ones. The border frontier is marked by military posts, rugged Himalayan mountains, and geographical features that lie undemarcated and differentially patrolled. Thus, it is often found that the armies or patrolling units of the countries come in contact and consequently, spark a confrontation. The unmarked border is marked by a ramping up of infrastructure by both countries.

In June 2020, a tense situation became lethal when the Chinese PLA entered the Indian side of LAC, leading to a round of negotiations that concluded that disengagement be initiated and a buffer zone be created to avoid contact and confrontation. Subsequently, the Indian commanding officer, Colonel Santosh Babu noticed that despite the agreement reached, the Chinese PLA had a camp that was not removed in the area. Upon his asking to get it removed, a physical brawl took place, resulting in the deaths of soldiers on both sides. The brawl witnessed the use of sticks, rods, bats, clubs, and stones as no guns were carried by the Indian side, a testimony of its honoring the 1996 agreement on Confidence Building Measures in the Military Field along the LAC. In the aftermath of this conflict, the Chinese government, unlike its Indian counterpart, didn’t release an honest and accurate account of the clash and fatalities on its side.

Outraged and distressed by the incident, the Indian government expressed that the border disagreement and conflict are at the core of the bilateral relations between the two countries, rendering other areas of cooperation meaningless. On the other hand, China, after its failure to restore the status quo in the Galwan Valley area, repeatedly asked India to keep the border situation aside from its bilateral relationship with its neighbor. Massive diplomatic and military negotiations followed. However, the situation couldn’t be resolved as the two militaries mobilized resources in the area.

Then, in an important development, the Indian Army took proactive steps and occupied the high ridgeline of the Kailash Range opposite the Chushul Bowl, a critical area from a security point of view. This was done in a covert nightly operation on the intervening night of 29-30 August 2020, in a step that both shocked and rattled the Chinese side. The area around Kailash Range is critical. This is because whoever controls the heights on the Kailash Range — from Pangong Tso to Rechin La — dominates all routes to the east and west, and forces the other side to hold defenses on the next ridgeline 6-8 km away or occupy positions of disadvantage on lower heights.

Economic and other actions by India

  1. India informally asked its airline companies to not entertain Chinese nationals for its transportation services.
  2. Multiple joint ventures (JVs) with Chinese companies and their bids were disqualified. Example – Vande Bharat Trainsets project
  3. India banned several Chinese apps, inflicting economic losses worth millions to Chinese technology companies.
  4. India tightened its visa rules and increasingly scrutinized Chinese agreements and contracts with local universities in India.
  5. The entire Indian market was used as a strategic battleground to counter the Chinese inroads in the country’s economic setup.
  6. India reviewed Chinese Confucius institutes in the various cities in the country.
  7. Chinese companies were excluded from India’s 5G operations.
  8. Chinese exports to India hit hard as Chinese products were protested against and discouraged.
  9. Various Chinese projects were stalled and left hanging, awaiting clearance from the Ministry of Home Affairs of India.
  10. New security protocols announced by India were announced to hit Chinese phone and drug companies.



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