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2016 was the year when China lost its top position as an investment destination to India. But that's in the past.
The important question now is: Will India Continue to Remain the Preferred Investment Destination over China in 2017?
There are many variables we need to look at for an answer. One important factor is how the US will define its relations with India and China. And that we will find out come January 20 - the day when Mr Donald Trump will swear in as the US's new President.
The future's uncertain, but Trump has planned his agenda for the first 100 days of his presidency. How much of that gets delivered... Who knows? If Trump goes by the promises he's made, China will be at a greater loss in terms of trade. This may prove beneficial for India. Allow us to explain...
Trump was always happy to pass the blame during his presidential race. For one, he blamed China for monetary fraud. He accused China of unfair investment practices resulting in the theft of American jobs. And this seems, to have triggered a US-China trade war.
If Trump sticks to his promise to resist Chinese investments in the US, China will have a lot to lose. A loss of business in China will mean more business flowing to investment- friendly destinations, the major benefactor of which would be India.
But things aren't as easy as they seem here. There remain many looming uncertainties.
First, the imminent threats from Trump has led China to bite the bullet. An article in the Economic Times said China has now opened up more sectors for foreign investors to catch up in the investment race. It is now offering a slice of tightly controlled segments like public transport and railway equipment to foreign players. Also, China has cut down the number of restrictions by a third, from 93 to 62. These measures indicate that China is leaving no stone unturned to pre-empt adverse actions from Trump's presidency.
Second, while Trump's antagonism for China might be good for India, a lot depends on India's capability to grab these opportunities. India is seen as a good spot to attract foreign investments. However, the recent demonetisation exercise could have some negative effect on foreign money flowing into India. Furthermore, it is also said that India might suffer damage in the crossfire of the US-China trade war. Estimates are also that China would double up dumping of its goods to countries like India when it will lose business in the US.
Nonetheless, these are early days and Trump's foreign policy may not be the same as his campaign rhetoric. Either way, there is opportunity for India to gain from Trump's decisions and minimize the downside risks from China. Will India oblige?
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