Jan. 18, DAVOS, Switzerland (Reuters) - A top Indian official gave the first indication that the four-year-old restrictions might be relaxed when he suggested that India might lessen its strict monitoring of Chinese investments if the border between the two nations stays quiet.

The main source of friction between the two nuclear-armed Asian superpowers, border tensions, have decreased, which may result in better investment relations, senior industrial policy bureaucrat Rajesh Kumar Singh told Reuters on Wednesday at the World Economic Forum annual conference in Davos, Switzerland.

2020 saw India add another level of vetting and security approvals to its already stringent regulations on investments from businesses situated in its bordering nations.

The action was mostly perceived as payback for the worst military confrontation in decades between Chinese and Indian forces, which took place on their disputed 3,800-kilometer (2,400-mile) Himalayan border and resulted in the deaths of at least 20 Indian and four Chinese soldiers.

The restrictions have shattered billion-dollar investment plans between the two most populous nations in the world, including those of Chinese automakers BYD and Great Wall Motor.

According to Singh, secretary of the Department for Promotion of Industry and Internal Trade, "the investment rules could change once our relationship there stabilises because I think the border issues that we've had - the border has stabilised" in an interview.

"On the investment side also, if things go well, I'm sure we can resume normal business."
He did not provide a timeline for a potential relaxation.

When Singh was asked if India was trying to convey to China that Chinese investments require a calm border, he responded, "You can't have somebody nibbling at your border while at the same time having red-carpet treatment for investments from there."

He claimed that India's recent, more expansive opening to international business was somewhat "stepped back" by the investment restrictions. With automated approvals, the removal of foreign ownership limitations in many industries, and a major reduction in barriers to inbound investment, India has made great progress.

China is India's top import supplier despite the border issues; bilateral commerce has increased 32% to about $114 billion in the fiscal year that concluded in March since tensions escalated.
Despite continuing peace negotiations, there were two incidents involving Indian and Chinese troops in 2022. Following a brief border war in 1962, New Delhi and Beijing have had a number of military and diplomatic discussions to end the dispute.

Indian Foreign Minister Subrahmanyam Jaishankar stated in June that the two neighbors needed to find a solution to back off from a possible conflict in the western Himalayas.

However, Singh stated, "There haven't been any incidents in the last year or so." Thus, I'm echoing the business community's broad optimism that things will, you know, stabilize and become better."

Singh stated that although no decision has been made, India would want to retain a "welcoming environment" for investments. One possibility India may eventually consider is a mechanism to examine foreign investments from all countries, similar to those in the US and Australia.