The cabinet committee on economic affairs (CCEA) has decided to give in-principle approval for a memorandum of understanding (MoU) between India and China for setting up industrial parks in the country.
The cabinet decision comes ahead of the visit of vice president Hamid Ansari to Beijing on the occasion of the 60th anniversary of Panchsheel, which once formed the bedrock of Sino-India ties.
Vice President Hamid Ansari will begin his five-day journey to China tomorrow from the historic city of Xian.
Commerce and industry minister Nirmala Sitharaman will accompany the vice president.
The details of the agreement will be available only after the signing of the memorandum, law and telecom minister Ravi Shankar Prasad said after a meeting of the Cabinet headed by prime minister Narendra Modi.
"Cabinet today approved in-principle a MoU with China with regard to establishment of industrial parks. The details and the contours of the MoU would be given once it is signed," he said.
China's annual overseas investments average $100 billion of which India received only about $400 million in the past 14 years.
China is interested in investing in India in sectors such as manufacturing, sources said, adding that sites in Uttar Pradesh, Haryana and Karnataka were identified but security concerns stalled their finalisation.
Commerce minister Sitharaman is expected to meet her Chinese counterpart and also discuss issues such as widening bilateral trade gap and greater market access for Indian products and investment.
India's trade deficit with China stood at about $40 billion while total two-way trade in 2013-14 stood at $65.87 billion.