While the war in Iran that was initiated by the United States and Israel rages on even as the world is staring at a massive potential energy crisis, India, rather quietly, unlocked the floodgates thereby easing the entry of Chinese investments into the country making it amply clear that the Narendra Modi government finds itself in a far more difficult position today than it had anticipated when the deadly conflict began on February 28.

India is currently facing a significant energy crisis, and New Delhi has recognised that it must take immediate measures to protect the economy from an impending downturn. One such measure is allowing Chinese investment to enter the country, even if it makes the government appear desperate.

On March 10, as the war in Iran entered its eleventh day, leading to a global energy crisis and disruptions in supply chains, India announced that it had eased restrictions on investments from "neighbouring countries." These restrictions were initially imposed under the Press Note 3 (PN3) amendments introduced in April 2020, allegedly to prevent opportunistic takeovers and acquisitions of Indian companies due to the COVID-19 pandemic. Needless to mention that the decision was met with significant discontent from Beijing.

The PN3 amendments in 2020 effectively shifted almost all Chinese investments from the automatic approval process—permitted for most countries—to a separate government route. The changes required additional security and political clearance. Even when approvals are granted in certain cases, the additional layer of scrutiny acts as a significant obstacle.

Within days of the restrictions being introduced, India witnessed a massive amassing of troops of the People’s Liberation Army (PLA) near the Line of Actual Control (LAC), in the eastern sector of Ladakh, that also saw the killing of 20 Indian soldiers in a hand-to-hand midnight combat with Chinese soldiers in the Galwan River Valley on intervening night of 15-16 June, 2020. This was the first time in 45 years that a military confrontation between India and China resulted in fatalities.

The Union Cabinet, chaired by Prime Minister Narendra Modi, decided to lift the........

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