India steps up economic offensive against China
Chinese firms to be kept out of highway projects in move after LAC clash
NEW DELHI: Chinese companies will no longer be allowed to participate in Indian highway projects, including through the joint venture route; China will not be allowed to invest in India’s micro, small and medium enterprises (MSME) sector; and imports from China will be discouraged, Union minister for road transport, highways and MSME, Nitin Gadkari, has said.
The minister’s statement, in an interview with the news agency Press Trust of India, is part of India’s efforts to impose economic costs on China in the wake of continued Chinese aggression at the Line of Actual Control (LAC), and a part of India’s signalling to China that this aggression cannot coexist with preferential economic ties, according to two officials familiar with the decision-making process in government.
Gadkari’s comments come in the backdrop of India’s ban on 59 Chinese apps earlier this week, decisions by various government departments to cancel contracts with Chinese firms, reports of imports from China getting stuck at ports, and an earlier decision, in April, to tighten foreign direct investment inflows from neighbouring countries — with an eye on China — by requiring them to go through a more rigorous government approval process.
On Wednesday, Gadkari said, “We will not give permission to joint ventures that have Chinese partners for road construction.
We have taken a firm stand that if they (Chinese companies) come via joint venture in our country, we will not allow it.” He added that a policy will be out soon banning Chinese firms, and relaxing norms for Indian companies to expand their eligibility criteria for participation in highway projects.
To be sure, according to both industry stakeholders and sectoral experts, there are a limited number of highway projects which have Chinese involvement at the moment. But Gadkari said rebidding will be done if there are any Chinese joint ventures, even as the decision will be implemented for current and future tenders. The minister also said that a process to relax financial and technical norms has been set in motion to ensure that Indian companies can qualify for larger projects and do not need foreign partners. “Even if we have to go for foreign joint venture in the areas of technology, consultancy or design, we will not allow Chinese,” he said.
Industry stakeholders pointed out that the significance of the decision lies in the relaxation of norms to encourage Indian firms. “There have not been many highway projects with Chinese investment either in the past or at present. Only a couple of projects are awarded in which joint ventures exist with Chinese as the minority partners with their Indian counterparts, mainly present for technical expertise. It is more like a technical collaboration than on ground work,” said Rajeshwar Burla, vice president, corporate ratings, ICRA Limited.