Commerce minister Piyush Goyal on Tuesday said relations between India and China are slowly moving towards normalcy with easing border tensions, and noted that trade and investment cooperation between the two Asian economies could expand further.Speaking about the recent meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping on the sidelines of the Shanghai Cooperation Organisation (SCO) summit, Goyal said the two leaders agreed to work towards a “fair, reasonable and mutually-acceptable” solution to the border issue and pledged to deepen economic engagement.
“This was an SCO summit, where all the SCO members participated. We had a problem in Galwan, due to which we had a blip in the relationship. As the border gets resolved, I think the situation getting back to normal is a very natural consequence,” Goyal told reporters when asked if improving India-China relations could also lead to relaxations in PN3.
India-China ties soured
Ties between New Delhi and Beijing soured significantly after the violent clash in Galwan Valley in June 2020, the most serious conflict between the two countries in decades. In the aftermath, India banned more than 200 Chinese apps, including TikTok, WeChat, and UC Browser, and rejected investment proposals from several Chinese firms, including EV major BYD.
Experts urges govt to take look at PN3
Currently, under Press Note 3 (PN3) introduced in April 2020, all foreign direct investment (FDI) applications from countries sharing land borders with India, including China, require prior government approval across sectors. The policy aimed to prevent “opportunistic takeovers” of Indian firms during the pandemic.However, the domestic industries are pushing for relaxation. Earlier, in July 2024, the pre-budget Economic Survey highlighted the need to attract Chinese FDI to strengthen manufacturing and boost exports, arguing that such inflows would enhance India’s participation in global supply chains.Experts quoted by PTI have urged the government to take a look at PN3, which mandates extra scrutiny of investments even if a Chinese investor holds a single share.They also suggested that the panel handling such proposals should clear FDI applications from neighbouring countries like China more swiftly to avoid unnecessary delays.Despite low investment levels, trade between the two countries continues to grow. China ranks 23rd in India’s FDI inflows with a negligible share of 0.34% ($2.5 billion) between April 2000 and March 2025. But on the trade front, the imbalance is stark.In 2024-25, India exported goods worth $14.25 billion to China, while imports reached $113.5 billion, pushing the bilateral trade deficit to $99.2 billion. This accounted for 35% of India’s overall trade deficit of $283 billion during the fiscal.
