Illustration: Xia Qing/GT

Is India's attitude toward Chinese investment subtly changing? The question has drawn the attention of not only Chinese investors, but also public opinion in some developed countries. It is an interesting phenomenon. In the latest example, it was reported by Japanese media outlet Nikkei Asia that "India edges warily toward accepting more Chinese investment."

Why are some media outlets in third countries interested in bilateral investment between China and India? Of course, relations between China and India, two of the world's major emerging economies, can easily attract the West's attention. What's more, the ongoing supply chain restructuring is prompting the outside world to devote more attention to the accessibility and ease of investing between China and India.

Some well-known Western companies like Apple have recently ventured to expand operations on both the manufacturing and sales fronts in India. Apple's investment is seen as an example of how India, a marketplace with abundant cheap labor, has attracted interest as a processing and assembly base, particularly for Western manufacturing companies. 

However, challenges including incomplete industrial chains mean it will not be easy to make such investment plans a reality. While large manufacturers like Apple can afford the high costs of relocating their industrial chains, small and medium-sized enterprises may not be willing or able to do so.

India needs to stimulate the growth of multiple supporting industries, including the manufacturing of components, and expand its imports of high-end intermediate products such as semiconductors. Those measures, along with other efforts, will help India attract foreign direct investment (FDI) in the processing and assembly sectors.

FDI equity inflows in India decreased by 3.49 percent in the financial year ended on March 31, 2024, Indian media outlet the Business Standard reported in May. FDI inflows into the manufacturing sector in that financial year were among the lowest in the past five years. The manufacturing sector received $9.3 billion in FDI, which was 17.7 percent less than in the previous fiscal year, according to the report.

India's economy is booming. However, in some economists' eyes, there is a hitch: investment is not keeping pace. Obviously, India wants to make its manufacturing sector an engine for economic growth and jobs. 

Considering India's interests, the country needs to attract foreign investment at a faster pace. Foreign companies should be encouraged to participate in India's manufacturing development and invest in industries such as components and parts, equipment manufacturing, and intermediate products.

Many Chinese companies have advantages in those fields. China has an independent and complete modern industrial system, being the only country in the world that possesses all the industrial categories in the UN industrial classification. 

The potential for economic cooperation between China and India in the field of supply chain investment is vast, and Chinese companies obviously still value the Indian market, although many of them are wary about investing because of the country's investment barriers and its crackdown on Chinese companies in recent years.

The past decade has witnessed some leading Western corporations accelerating their push into countries including India, driven by the hype of "diversifying supply chains away from China." Given the unshakable status of China's manufacturing in global supply chain cooperation, it is simply unfeasible that their production capacity can be completely shifted from China to other countries. Instead, closely integrated industrial chains between China and those countries, including India, are beneficial for multinationals' global layout.

China and India are two major developing countries. Some Western politicians may not be willing to see closer relations between the two countries, but from an economic perspective, further integration of the industrial chains of the two countries is beneficial for Western corporations. In this process, India needs investment from China. It is not surprising that India's attitude toward Chinese investment periodically makes headlines in Western media outlets.

India has in recent years tightened its scrutiny of investment by Chinese companies. We hope India can change its attitude toward Chinese enterprises, attract more foreign investment and provide a fair investment environment for Chinese companies.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn