Natixis’ chief Asia economist says Modi’s Bharatiya Janata Party is engaged in an “internal battle” over whether India needs Chinese investment | Wilnesh News

Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, said that as India strives to become a manufacturing powerhouse in Asia, the ruling Bharatiya Janata Party is internally discussing inviting Chinese investment. An “internal struggle” begins.

In India’s annual economic survey released last week, India’s chief economic adviser V Anantha Nageswaran suggested that promoting foreign direct investment from China is a better option than increasing trade activities between the two countries. He reports to the Minister of Finance.

The proposal was rejected by Trade Minister Piyush Goyal on Tuesday, who said there was “no reconsideration at the moment” to allow Chinese investment in India, Reuters reports.

“No one wants to live with how this will affect the image of the BJP,” Garcia-Herrero told CNBC. “Indians will not like this policy, but Modi and his finance ministry realize it is necessary.” of.

CNBC did not immediately receive a response from the BJP on whether there was an intra-party conflict over the issue.

The world’s fastest-growing economy aims to attract $100 billion in foreign direct investment annually over the next five years, said Rajesh Kumar Singh, secretary of the Ministry of Industry and Internal Trade Promotion Bloomberg in June. it received FDI inflows reached US$70.95 billion FY2024.

Experts told CNBC that Chinese investment is needed in India’s solar panel and battery manufacturing industries — two areas where a report last week quoted Indian government sources as saying restrictions on Chinese investment could be eased.

“The United States and Europe are a little hesitant to invest in Indian manufacturing, and most foreign investment has gone to ICT (information and communications technology) industries such as digital services,” Herrero said.

Harsh V. Pant, vice president for research and foreign policy at the Observer Research Foundation in New Delhi, took a similar stance, saying that if India wanted to realize its aspirations of becoming a manufacturing hub in Asia, it needed to “integrate with China supply chain”.

However, he added that this was not just an economic issue, especially as the Asian powers have been at loggerheads over their Himalayan border.

“From an economic perspective, there are areas where Chinese investment is needed and perfectly logical arguments can be made. But the Indian government will take a holistic approach, taking into account the national security and geopolitical dimensions.”

in a speech press conference India’s External Affairs Minister S Jaishankar said in Tokyo on Monday that relations with China “are not good (and) not normal at the moment”.

June 2020, 20 indian and Four Chinese soldiers were killed in action In a standoff in the western Himalayas. Although no shots were fired, it was the deadliest fighting between the two countries since 1967.

After the incident, India stepped up scrutiny of Chinese investments and blocked several Chinese mobile apps, including TikTok.

India aims to achieve Achieve net zero emissions by 2070 By 2030, 50% of electricity demand will come from renewable energy sources.

However, according to statistics, last year China’s largest renewable energy power generation, solar power generation, totaled only 113 terawatt hours (TWh), compared with 584 TWh in China and 238 TWh in the United States. Energy think tank Ember.

“India really cannot miss China’s investment in manufacturing. India’s trade deficit with China increased significantly last year, mainly because of green technology,” Herrero said, adding that China has the lowest production costs, the highest efficiency and the lowest costs. of green technology.

Herrero said that India has no choice but to rely on China to strengthen its renewable energy industry, and choosing to increase domestic production through more Chinese investment would be a better choice than increasing imports. “At least there will be more money to create jobs.”

Just as India’s renewable energy goals require increased investment, so too does India’s battery manufacturing industry. Accounts for 30% of all car sales It will be electric by 2030.

Mukesh Aji, chairman and CEO of the US-India Strategic Partnership Forum, made it clear that although the Indian electric vehicle market is growing steadily with the help of domestic manufacturers such as India. Tata Motors Compared with Mahindra & Mahindra, it lags behind in an area where China is booming: creating cost-effective battery technology.

Samir Kapadia, CEO of India Index and Head of Vogel Management, said: “India does not have a developed EV battery ecosystem and needs support from third parties, especially from countries such as China, to accelerate efforts to achieve strategic goals, like the U.S. Same.

“It can achieve these goals by easing investment restrictions.”

Asked in what areas India would like China to invest more, Kapadia said it would be “the biggest industry they have to fight to win”.

“The industries that attract Chinese investors will be those that are too big to fail. India must build these industries in the next five years to become a developed economy that can realize its full potential. Chinese investment also has May be used to develop India’s semiconductor industry.