Indian businesses may have contributed to the recent breakthrough between Prime Minister Narendra Modi and Chinese President Xi Jinping, Bloomberg has reported, citing sources. The two neighbors reached an agreement on a disputed border area in the Himalayas earlier this week. Modi and Xi held their first bilateral meeting in almost five years on Wednesday at the BRICS Summit in Kazan, Russia.
Indian CEOs pressured Modi’s government for months to relax the restrictions on China imposed after a 2020 border clash, the publication wrote, citing unnamed officials familiar with the matter.
The CEOs said the measures were backfiring on Indian companies and hurting Modi’s push to make India a manufacturing hub, especially in chipmaking, the outlet added.
Relations between New Delhi and Beijing deteriorated after an incident in 2020 at the Line of Actual Control (LAC) – a 3,500-km (2,100-mile) disputed border in the Himalayan mountains. Clashes between the troops resulted in 20 Indian and four Chinese soldiers being killed.
Following the incident, Modi’s government imposed strict rules on Chinese businesses seeking to invest in India, banned hundreds of Chinese apps, and slowed visa approvals. The steps resulted in the collapse of several investments proposals, including Chinese company BYD’s $1 billion plan to build electric vehicles in India, Bloomberg reported.
On Wednesday, Xi agreed “in principle” to Modi’s suggestions on improving and developing relations. According to Xinhua news agency, both leaders agreed to prevent certain disagreements from affecting overall relations.
New Delhi could start by fast-tracking visas for Chinese technicians and adding direct flights between the two countries, Bloomberg reported, citing officials familiar with the matter. Investment proposals would be cleared on a case-by-case basis, with preference given to Chinese manufacturing projects backed by government incentives, it added.
India is also reportedly considering a proposal to allow Chinese investment of as much as 10% in majority-owned Indian companies in sectors such as electronics and electric vehicles, Bloomberg added, citing an unnamed Indian Finance Ministry official.
China and India are among the founding members of the BRICS economic group, which also includes Russia, Brazil, South Africa, Egypt, Iran, Ethiopia, and the United Arab Emirates. Saudi Arabia, which was also invited to become a member, has not finalized the ratification process.
