However, developed countries are accepting investments from China in any particular sector, India can also welcome such investments.
“If the US is taking investment from China, if Germany is taking, I would (be) open to their investment. The activities from which you want to exclude are relatively few because I don’t see other countries restricting Chinese investment in large number of sectors,” Panagariya said at the CII Global Economic Policy Forum 2024.
The Economic Survey 2023-24, too, had made a strong case for seeking foreign direct investments (FDI) from China to boost local manufacturing and tap the export market. It also said increased FDI inflows from China can help increase India’s global supply chain participation and push exports.
Panagariya also made a case for India to enter into Free Trade Agreements (FTA) with more nations, saying its relevance today has increased because components are manufactured in multiple nations and high cross-border tariffs add to the final cost of the product.
Giving the example of iPhone, he said it manufactured using parts that are produced in 43 countries and then assembled. In this kind of situation, where parts are moving for assembly across many different borders if there are high tariffs at each border, the cost and the tariffs get added on. “If you really want multinational companies to come to the Indian shores, you want to give them play over a very large space over which frictionlessly inputs, outputs, products and processings can move… have FTA with the EU, have FTA with the UK. “We have already done with Australia and some other countries. That would give a large space where inputs and outputs and processes can move freely without any friction,… freer trade and lower tariffs become even more important,” Panagariya said.
Currently, India is negotiating FTAs with several countries, including the EU, the UK, Peru, and Oman.
