India considered reviewing clearance for Chinese investment in a tit-for-tat response on Monday after Beijing snubbed New Delhi by blocking a move to have Pakistan-based Jaish-e-Mohammed militant group chief Masood Azhar on the UN sanctions list.
Official sources said the move to review security clearance for Chinese firms investing in India is meant to send a message to Beijing for its action in the UN four days ago. India has reasons to be upset because Azhar is the lynchpin in the audacious Pathankot airbase attack in January.
“Pakistan has an important place in Chinese diplomacy … China’s intervention in that case must be seen in this context. China will stop supporting Pakistan when it starts being affected by terrorism,” junior foreign minister and former army chief VK Singh said in Gorakhpur.
India and China share an uneasy relationship since the 1962 war between the two Asian giants over longstanding territorial disputes in Arunachal Pradesh and Jammu and Kashmir’s Ladakh region that the Chinese claim to be theirs. The Chinese intimacy with Pakistan, supplying India’s bitter rival with arms and tipping the regional balance, has been a diplomatic thorny point too.
But the two neighbours tried to mend fences since Narendra Modi rode to power in 2014 and visited China the next year, prompting a flurry of open-door policies, including a liberalised security clearance regime for Chinese investors that began last June.
This boosted Chinese investment as the Union home ministry removed China as a “country of concern” under the new policy, leaving only Pakistan on the list. The policy was not particularly aimed at China but it eased restrictions on Chinese companies willing to do business in India.
Earlier, the majority of investment proposals from China used to be denied clearance.
The home ministry was now having a rethink about its national security clearance policy, ostensibly to snub its northern neighbour, though the official reason given was that foreign direct investment proposals from China have not delivered desired results.
They said the government might change the policy with retrospective effect, cancelling all proposals cleared in the past nine months.