India needs more FDIs from Chinese companies, while doing more for Indo-Pacific. Learn from Southeast Asia
There is an old saying: “Speak softly and carry a big stick.” It means that a country should talk politely, but also stay strong and ready to protect itself. This idea fits India’s situation today.
This week, the foreign ministers of India, the US, Japan and Australia met in New Delhi. These four countries together are called the Quad. They discussed projects in important areas like minerals, energy, ocean safety and even building a port in Fiji. China was not happy. It said the Quad is like a private club formed against it.
India, however, says the Quad is not against any one country. That is a smart thing to say, because India has to deal with China very carefully. India and China have border problems. They also compete for power in Asia. But at the same time, India could benefit from more Chinese investment in factories and businesses. So India has to walk a tightrope: it must protect its security, but also grow its economy.
This is where India needs its own version of “speak softly and carry a big stick.” India should welcome useful Chinese investment, especially in areas that are not dangerous for national security. But it should also keep strong rules in place to protect important sectors.
Recently, the Indian government made it easier for some Chinese companies to invest in India. For example, Chinese investors may be allowed to buy small shares in Indian companies without waiting for long government approval. India also wants to speed up approvals for investments in important manufacturing sectors.
But China has never been a huge investor in India. Between April 2000 and December 2025, Chinese FDI into India was only about $2.5 billion. FDI means foreign direct investment, which is when companies from one country invest money in businesses, factories or projects in another country.
The problem is not only China. India also needs to become easier for foreign companies to work in. It needs better roads, ports, rules, contract enforcement, cities, housing and facilities. Big companies want places where it is easy to do business and easy for their workers to live.
If Chinese companies invest more in normal, non-sensitive sectors in India, China may start seeing India more as a business partner and less only as a rival. At the same time, India still needs to stay strong in the Indo-Pacific region, where many countries worry about China becoming too powerful.
India can learn from Southeast Asia. Countries in Southeast Asia have disagreements with China, but they still accept Chinese investment carefully. Chinese investment in ASEAN countries grew from less than $4 billion in 2010 to about $17 billion in 2023. Even the Philippines, which strongly opposes China in the South China Sea, still accepts some Chinese investment in infrastructure projects.
So India should do both things at once: welcome useful Chinese investment where it is safe, and stay strong with partners like the US, Japan and Australia in the Indo-Pacific. That is the real balancing act.
Disclaimer
Views expressed above are the author’s own.
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