India Walks a Strategic Tightrope as It Seeks Investment from Both the U.S. and China

India is increasingly balancing geopolitical priorities with economic objectives, easing select investment restrictions while recalibrating trade policies to attract capital from both the United States and China without compromising domestic interests.

India's economic strategy is undergoing a gradual shift as policymakers seek to attract greater foreign investment while managing complex geopolitical relationships with the world's two largest economies—the United States and China. Rather than pursuing an all-or-nothing approach, the government has increasingly adopted a calibrated policy that combines strategic caution with selective economic openness.

Over the past few years, New Delhi has introduced measured relaxations across several policy areas, including foreign direct investment (FDI), market access, and trade regulations. The objective is to sustain India's manufacturing ambitions, strengthen supply chains, attract global capital, and position the country as an alternative production hub amid evolving global economic realignments.

One of the clearest indicators of this balancing approach is India's evolving use of anti-dumping duties, a key trade policy instrument designed to protect domestic industries from imports sold below fair market value. Normally, investigations into alleged dumping are conducted by the Directorate General of Trade Remedies (DGTR), which examines evidence, consults stakeholders, and submits recommendations to the Ministry of Finance regarding the imposition or continuation of anti-dumping duties.

Historically, these recommendations were almost always accepted. Between 1991 and 2020, the DGTR made 1,052 recommendations, of which only five—or approximately 0.5%—were rejected by the Ministry of Finance. However, this pattern changed significantly after 2020, suggesting a more cautious approach towards imposing additional trade restrictions.

Data indicates that the rejection rate of DGTR recommendations rose sharply to between 50% and 62% during 2020–21, 2021–22, and 2022–23. Although the rate declined to 20.8% in 2023–24 and further to 6.1% in 2024–25, it increased again to 41.5% during 2025–26 (up to December 31, 2025). The fluctuations suggest that economic priorities and global trade dynamics are increasingly influencing decisions on trade remedies.

A significant proportion of the rejected recommendations involved imports originating from China. Since 2000, approximately 72% of all rejected anti-dumping cases have related to Chinese goods, either individually or alongside imports from other countries. The trend reflects India's effort to balance domestic industrial protection with broader economic considerations, including the availability of raw materials, manufacturing inputs, and investment opportunities.

India's broader economic policy also reflects this balancing act through selective easing of investment norms in certain sectors while continuing to maintain enhanced scrutiny over investments from countries sharing a land border with India. At the same time, the country has strengthened strategic and economic partnerships with the United States through cooperation in semiconductors, defence manufacturing, critical technologies, clean energy, and resilient supply chains.

As India pursues its ambition of becoming a global manufacturing and export hub, policymakers are attempting to reconcile two competing priorities: protecting domestic industries from unfair trade practices while ensuring that businesses continue to receive access to affordable imports, technology, and international investment. The evolving approach reflects a pragmatic effort to maximise economic opportunities without compromising long-term strategic interests.