Maharashtra’s decision intensifies investors’ worries

India is being “incredible” with one of its most developed states putting on hold business plans with Chinese companies in the wake of the recent border clash, a Chinese expert said.

The state government of Maharashtra, home to the Indian city of Mumbai, said on Monday that it had put on hold three investment proposals from Chinese firms worth 50 billion rupees ($658 million) in total.

The initial agreements are not being canceled, but further action is awaited, Reuters reported.

The three affected deals include one by Great Wall Motor (GWM), a major Chinese maker of sport utility vehicles, to invest nearly $500 million in Talegaon in Pune district.

“The company has yet to receive relevant information from the Indian government,” Great Wall Motor told the Global Times on Tuesday.

The automaker declined to comment on media reports but said that it will follow future developments.

The suspension came days after India’s reported cancellation of a contract awarded to China Railway Signal and Communication Corp for its Eastern Dedicated Freight Corridor project, the largest project involving a Chinese company in India.

“India’s hyper-sensational approach toward business can only be described as immature. With its incredible attitude toward the projects such as that of GWM, global investors must take notice,” said Xu Liping, an expert on Indian issues.

Losing the deals will impact Chinese companies, but the cost will be higher for India, the expert said.

Jia Xinguang, a veteran car industry observer, said the media report highlighted rising risks for Chinese capital-intensive investment in India, where many hold an increasingly hostile view toward China.

“The Indian auto market is not big, only about one tenth of China’s, and it might be a blessing in disguise if the deal fell apart at its initial stage, before Chinese investors put massive money into this high-risk endeavor,” Jia told the Global Times on Tuesday.

“Unfortunately, most Indians are raised with the perception that the dragon (China) stands in the way of the elephant (India),” Jia said.

Great Wall said in January it had agreed to buy US automaker General Motors’ car plant in Talegaon in Maharashtra state.

The other two Chinese companies affected – Hengli Engineering and PMI Electro Mobility Solutions’ JV with Photon – could not be reached for comment on Tuesday.