Yin & Yang Of Quad
India needs more FDIs from Chinese companies, while doing more for Indo-Pacific. Learn from Southeast Asia
‘Speak softly and carry a big stick’ is an adage attributed to Theodore Roosevelt. With Quad foreign ministers meeting in New Delhi this week, the India-US-Japan-Australia grouping appears to be channelling the spirit of the former US president. The meeting resulted in a series of initiatives in areas such as critical minerals, energy security, and maritime surveillance. There’s also a plan to build a port in Fiji. Of course, the elephant in the room is China, which was quick to denounce the Quad meeting as an exclusive clique.
India, for its part, has been clear that Quad is not directed against any third country. That’s clever. Managing China requires India to walk a tricky tightrope, juggling historical territorial issues, economic interdependencies, and regional strategic questions. This is where India needs its own version of ‘speak softly and carry a big stick’. A sweet spot that smartly combines economic enticements and strategic national security guardrails. In March, GOI approved Press Note 2 to allow non-controlling stakes of up to 10% in Indian firms, without prior govt approval. It also pitched a 60-day expedited approval process for investments in priority manufacturing sectors. Both with an eye to accelerating FDI from China.
Note, China has never been a major source of FDI for India – a mere $2.5bn between April 2000 and Dec 2025. It’s not that Chinese companies are shy of investing. But the fact is, despite recent loosening of rules, India still isn’t attractive enough for large investments, especially in manufacturing. From poor infra and red tape to weak enforcement of contracts, and unpredictable business environment. And then there are the soft issues – ease of living and working, quality urban spaces, and recreational facilities that entice foreign companies to set up shop. Anecdotally, Japanese businesses don’t invest in countries without quality golf courses.
Without serious Chinese FDI inflows in non-strategic sectors, China is more likely to view India from the prism of regional strategic calculus, where our interests don’t often align. But higher FDI inflows will force Beijing to think in terms of win-win strategic partnership. Conversely, without a fast-growing economy, India can’t do more for the Indo-Pacific anyway, when it comes to tamping down on China’s hegemonic tendencies. New Delhi should learn from Southeast Asia – Chinese FDI inflows into Asean rose from less than $4bn in 2010 to $17bn in 2023, despite all their differences. Even Philippines, with its strident opposition to China in South China Sea, is selectively receiving Chinese investments in its infra projects. Time India steps up its own game.
Disclaimer
Views expressed above are the author’s own.
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