India is reshaping its foreign direct investment (FDI) policies in the semiconductor sector, opening a gap, albeit carefully regulated, for the participation of Chinese companies. This decision represents a significant change in Indian strategy, traditionally cautious towards investments from China, especially in sectors considered strategic such as semiconductors.

The move is motivated by the need to diversify supply sources and accelerate the development of a national ecosystem for chip production. India aims to become a global hub for semiconductor design and manufacturing, and to achieve this goal it needs capital, skills and technologies that, in part, can also come from China.

However, the Indian government intends to maintain strict control over these investments, to avoid risks to national security and to ensure that Chinese companies operate in compliance with local regulations. The modalities and limits of this Chinese participation will be defined in the coming months, but it is clear that India intends to balance the need to attract investments with the safeguarding of its strategic interests.