Union Commerce and Industry Minister Piyush Goyal on Friday said India’s recent engagement with China should not be seen as a reaction to US tariff measures but as part of a longer-term strategic approach following progress on border issues.
He also said India will address its future trade relationship with the United States with a "very open mind".
Speaking at an event organised by The Economic Times, Goyal emphasised that approvals for Chinese investments will continue to be guided by India’s national priorities in technology and supply chain development. “Post Press Note 3, we have given approval to many companies. Wherever industry, technology or supply chain aligns with India’s vision, those applications have been cleared. The same process will continue,” he said.
Goyal ruled out any dilution of the `Press Note 3 framework', introduced in 2020 to bring foreign direct investment from neighbouring countries under government scrutiny. He stressed that the measure was not a ban but a safeguard against opportunistic takeovers during the pandemic. “We only take a cautious approach, and there are free approvals wherever appropriate,” he added.
His comments come amid reports that Chinese investment approvals have accelerated in recent months, coinciding with rising US protectionism. India has been among the hardest hit by Washington’s tariff hikes, with a 25 percent additional duty on Indian exports to the US set to take effect from August 27.
Goyal clarified that the renewed engagement with Beijing stemmed from a resolution of border frictions that had stalled ties after the Galwan clashes. Earlier this week, Chinese Foreign Minister Wang Yi visited India, with both sides agreeing to resume supplies of rare earths, fertilisers and heavy machinery. Prime Minister Narendra Modi is also expected to meet President Xi Jinping during the Shanghai Cooperation Organisation summit in China later this month.
On wider trade policy, the minister said India would continue to pursue free trade agreements actively. He noted “rapid progress” in negotiations with the European Union, targeted for completion in 2025, while deals with New Zealand and Oman could be wrapped up within months. Talks are also under way with Chile, Peru and the Eurasian Economic Union.
“We are not reacting to global developments; we are proactively working with partners to expand business,” Goyal said.
Despite India’s heavy trade dependence on China, investment flows remain modest. Between April 2000 and March 2025, Chinese FDI into India stood at just $2.5 billion—barely 0.3 percent of total inflows—while India’s trade deficit with China has ballooned to nearly $100 billion.