New Delhi’s decision to open her telecom and defence sectors to Foreign Direct Investment will not only benefit International companies but also Chinese companies who have vigorously been trying to gain a strong foothold in one of the largest global telecom markets. While Chinese investments in the defence sector look bleak considering our sweet and sour neighbourly relations, telecom could be China’s golden goose.
With Huawei and ZTE already firmly entrenched in India, the granted 100 percent FDI in the telecom space will propel several other allied telecom companies and their peripheral manufacturers to India. Similar to the automotive space, Chinese companies will now have a lot more room to play in the Indian market. While this is sure to widen the bilateral trade deficit between China and India, in the long run, looking at the development it might herald, this might be a good thing.
Chinese companies are most likely expected to expand their role in the manufacturing and assembly of handsets in India. With the Indian ambassador to China, S Jaishankar already giving them the green light in February this year, the lure of increased investments will only broaden the scope of work for Chinese companies in India.
Further, on a more softer note, the move could also augment relations between the two countries who have been vying for a larger share of each others markets over the last several years. Ultimately leading to stronger ties and better understandings.