The COVID pandemic has upthrusted anti-China cold opinions worldwide. Notwithstanding China’s sturdy footing in Factory-Asia’s manufacturing supply chain has led multiple countries now to contemplate and cultivate an alternative plant chain based out of the doors of China.

China accords warm investment connections with numerous countries. Though its voracious trade practices and associated trade weaponization have made a severe backlash internationally, and consequently, the current COVID pandemic promotes and hastens this process. China’s bitter and mischievous conduct has led numerous states to shook out of the hook. Everywhere throughout the chronic public health crisis, trepidations and discernments are built over foreign direct investments (FDIs). It is especially directed at strategic sectors, expressly those from Chinese state-owned corporations. Now the states have fostered meticulous foreign investment screening tools to preserve the state’s affair linked to foreign purchases of strategic areas.

How Can rising anti-China opinions favor Indian overseas direct investment?

The expanding concerns of a hostile amalgamation takeover by Chinese firms have formed a cynical thought towards Chinese investments globally. The negative sentiment against Chinese investment has exposed an assertive stage for Indian investors overseas. In such a situation, comprehensible policy aid is entailed for these investments.

Recently in March 2020, Australia declared interim renovations to its foreign investment review structure. European Commission too began to reform their regulations to member states to enact rigorous foreign investment screening mechanisms. In Apr 2020, India also had revised and amended the Consolidated Foreign Direct Investment Policy, 2017, to ward off foreseen greedy acquisitions of Indian companies by Chinese corporations. The main purpose of India to recently update its Foreign Direct Investment (FDI) policy which is intended to limit “opportunistic takeovers” of firms hammered by the lockdown provoked by the COVID-19 blast. 

The government stated firms in neighboring countries who desire to invest in Indian companies will have to first necessitate its endorsement. An entity of a country that shares a land border with India can now invest in firms here “only under the Government route”. This also pertains to “beneficial” obtainers — even if the investing company does not reside in a neighboring country, it would still be subordinate to these provisions if its owner is a citizen or resident of such a country. Although the announcement did not specify any country, interpreters see the amendments as pointed at probable Chinese investments.

As a revert, China termed it as a violation of international trade principles as the move flustered the state. It further requested for India to review these “discriminatory practices” and entertain the investments from different countries fairly. The supplementary limitations set by the Indian side for investors from particular countries dishonor WTO’s (World Trade Organization) principle of non-discrimination and contravene the general aim of liberalization and facilitation of trade and investment. 

Outward Foreign Direct Investments (OFDI) by Indian companies experienced a noteworthy and enormous change regarding its magnitude, geographical unfold, and sectoral composition. Indian companies have bequeathed in joint ventures (JVs) and whole-owned subsidiaries (WOS) originally through mergers and acquisitions (M&A).

The latter decade observed a tangible transformation in Overseas Investment Destination (OID), where flourishing countries became the favored destination for Indian companies to invest in. In 2019-20, nations such as Singapore, the US, the UK, Mauritius, and the Netherlands estimated for nearly 70 percent of Indian overseas investments. Most of the fortes and assets are executed in equity loans to subsidiaries/affiliated enterprises. The striking sectors of these OIDs are business services, manufacturing, construction, electricity, gas & water community, and restaurants & hotels where young Indian firms are favored to finance in the service sector, while older firms are towards manufacturing and others.