MUMBAI: A meeting of Asian neighbours in distant South Africa is rekindling hopes of businesses back home. Indian Prime Minister Narendra Modi’s exchange with Chinese President Xi Jinping on the sidelines of last week’s BRICS summit may signal official interest in thawing a financial relationship hamstrung since 2020 by border tensions. A screening policy that dramatically slowed investments into India looks ripe for some fine-tuning.

While the dialogue between the two leaders appeared focused on unresolved issues on their shared over 3,000-km (1,860-mile) frontier, it sets the tone for a broader engagement on bilateral issues at next month’s G20 summit in New Delhi. India appears to be warming up to a larger Chinese presence in its businesses three years since it introduced an approval regime for investments from countries sharing a land border. The impact of screening was steep: foreign direct investment from China was small, amounting to some $6 billion including in pharma, technology and autos, per Gateway House, a think-tank, but official Indian data show it slid to $11.7 million in 2021.

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A softening of its stance against its second largest trading partner is now palpable, albeit with strict controls and limits. Authorities in New Delhi have been clearing proposals in sectors like renewable energy and electronics, partly driven by firms like Apple (AAPL.O) which wants its Chinese component makers around as it builds iPhones in local factories. Corporate tie-ups are in the works, too. Fast-fashion retailer Shein, whose app India banned in 2020, is returning in partnership with Reliance Industries’ (RELI.NS) retail unit, the Wall Street Journal reported in May. Sajjan Jindal’s steel-to-paints conglomerate JSW is sizing up a large minority stake in SAIC Motor-backed MG Motor India, the Economic Times said in June.

Faster and more frequent clearances could be on the horizon – as of March 2022, India had approved only 66 of 347 FDI proposals under the screening mechanism. Actual investments currently lag the number of approvals; a better geopolitical relationship could narrow the gap. One priority area might include anything that abolishes the import of foreign products and encourages domestic production, such as in electric vehicle manufacturing. India’s digital economy - previously a big area of interest for Chinese entities – may remain out of bounds on data security concerns.

Modi has made a deepening financial relationship with China dependent on a warming political one. So long as relative calm continues on the border, warmer handshakes could follow.