India considering lifting restrictions on some Chinese firms

India’s government is weighing options to ease investment restrictions on some Chinese firms, an official familiar with the matter said, a move that could help the South Asian nation boost its domestic manufacturing.Discussions are underway on whether to give exemptions to Chinese firms in hi-tech sectors like solar modules and critical minerals, the official said, asking not to be identified as the discussions are private. The Ministry of Commerce and Industry and other security-related departments are examining the issue, the official said, adding that a final call on the issue hasn’t been taken yet.

India-China relations spiraled downwards after a deadly 2020 border clash between the two nuclear-armed neighbors, with New Delhi imposing strict rules on Chinese businesses, banning Chinese apps and slowing visa approvals. Indian firms, especially in manufacturing, say the curbs have hurt their operations and are undermining the government’s ability to become a factory hub in the region.

Reuters earlier reported India was considering easing the restrictions on some businesses.

The government’s annual Economic Survey report, authored by the chief economic adviser and released Monday, made a strong pitch for India to attract more investment from China as a way of boosting manufacturing.

“Focusing on foreign direct investment from China seems more promising for boosting India’s exports to the US, similar to how East Asian economies did in the past,” according to the report.