Its not so much of a protectionist measure. There is no “domestic industry” that they are trying to protect here. Its just a condition that if you want access to Indian market then you must also create some manufacturing jobs there. China had the exact same policy for years. No one talks about but look where they are today.
O.K. I grant you that the Indian proposal was no more “protectionist” than China’s incentives to foreign companies, ON THE SURFACE.
However,
on the positive side, for China, they did more in terms of infrastructive than India has managed to do;
but, on the negative side, China not only sought foreign firms to manufacture in China if they wanted product placement in China, they quite often (a) REQUIRED, MANDATED those deals to include “partnerships” with local Chinese companies, very frequently companies part-owned by a unit of the Chinese government, and (b) many of them resulted in technology transfers to the Chinese partner and many of them, (c) once they had enough technology and education from the foreign partner went into competition with the foreign partner;
those measures by China - (a), (b) and (c) were long-term “protectionist” measures.
GM itself might be chuckling at it’s success today in China but it will one day rue the day it ever believed it would last.
China’s “capitalism” is fascistic state-Capitalism and it has no intention of foreign firms success lasting longer than their usefulness to helping build their Chinese competitors.
India can adopt a different model of attractiing foreign manufacturers and do so without the long term negatives in the Chinese method, but first it needs to do as well as China in what any manufacturers need - good infrastructure in energy and transportation.