Chi­nese Cos Plan to In­crease In­vest­ments Across In­dian States

China feels there is still some room for im­prov­ing busi­ness en­vi­ron­ment in In­dia

The Economic Times - - Economy - Di­pan­janRoy.Chaud­hury @times­

New Delhi: Hop­ing to give a leg up to the Chi­nese in­vest­ments in In­dia, small and medium-sized en­ter­prises (SMEs) from China are plan­ning to in­vest $1 bil­lion across var­i­ous states in sec­tors rang­ing from telecom­mu­ni­ca­tions to elec­tri­cal equip­ment to ap­pli­ance man­u­fac­tur­ing and ma­chin­ery as part of Pres­i­dent Xi Jin­ping’s an­nounce­ment in 2014 of in­vest­ing $20 bil­lion in In­dia in five years.

While there was a de­cline of Chi­nese in­vest­ments in In­dia in 2015, Bei­jing is hop­ing to in­crease the quan­tum of its for­eign di­rect in­vest­ment (FDI) in In­dia in the cur­rent year to boost eco­nomic part­ner­ship, not­with­stand­ing dif­fer­ences over strate­gic is­sues in­clud­ing Pak-based ter­ror. Ahead of what can be de­scribed as a China week, with the de­fence min­is­ter and NSA trav­el­ling to Bei­jing and Ex­ter­nal Af­fairs Min­is­ter Sushma Swaraj’s meet­ing with her Chi­nese coun­ter­part in Moscow, se­nior Chi­nese govern­ment sources told ET that China is re­vis­ing its pro­posal for two in­dus­trial parks in Gu­jarat and Ma­ha­rash­tra with ad­di­tional cap­i­tal and plan­ning to in­vest $6.8 bil­lion in th­ese two fa­cil­i­ties.

In the elec­tric­ity-in­dus­trial park of Gu­jarat, cer­tain fac­to­ries such as Te­bian Elec­tric Ap­pa­ra­tus have been launched. In the au­to­mo­bile-in­dus­trial park of Ma­ha­rash­tra, some ad­di­tional cap­i­tal has been in­vested, ac­cord­ing to the Chi­nese govern­ment sources.

Be­sides th­ese parks and new in­dus­trial city by Dalian Wanda Group in Haryana, China Small and Medium En­ter­pri- ses In­vest­ment Group ( CSMEIG) has signed MoU for set­ting up an in­dus­trial park with the Gu­jarat govern­ment. The to­tal in­vest­ment plan in this in­dus­trial park is $1 bil­lion.

The amount of non-fi­nan­cial in­vest­ment from China to In­dia has been reg­is­tered at $589 mil­lion be­tween May 2014, when Naren­dra Modi govern­ment came to power, and un­til Jan­uary 2016, ac­cord­ing to the Chi­nese govern­ment sources fa­mil­iar with the de­vel­op­ments. Prime Min­is­ter Modi has also as­signed of­fi­cials to specif­i­cally deal with Chi­nese in­vest­ments. There is a spe­cific China desk in the De­part­ment of In­dus­trial Pol­icy & Pro­mo­tion (DIPP), be­sides ded­i­cated desks for Ja­pan, South Korea, USA and Canada.

While ad­mit­ting that the in­vest­ment from China to In­dia wit­nessed a de­cline in the first half of 2015, Chi­nese of­fi­cials claimed that the rapid growth came back in the sec­ond half. “Through­out the year 2015, the non-fi­nan­cial di­rect in­vest­ment from China to In­dia was $143 mil­lion,” an of­fi­cial in­formed. In 2014, non-fi­nan­cial di­rect in­vest­ment from China was $220 mil­lion. And at the end of 2015, the cu­mu­la­tive non-fi­nan­cial di­rect in­vest­ment from China to In­dia touched $3.55 bil­lion.

Ac­cord­ing to Chi­nese govern­ment, there are cur­rently more than 300 Chi­nese com­pa­nies in In­dia that in­cludes Huawei, TBEA, ZTE, Sany, Li­uGong Ma­chin­ery and Haier Group. The foot­prints of Chi­nese firms are ex­pand­ing in tex­tile, food pro­cess­ing and au­to­mo­bile sec­tors.

China is rel­a­tively sat­is­fied with the pace of re­forms un­der the Modi govern­ment. “The Modi govern­ment is not only mak­ing ef­forts in im­prov­ing the gov­ern­ing ca­pac­ity, sim­pli­fy­ing ad­min­is­tra­tion and mov­ing for­ward the re­forms in­ter­nally, but is also pay­ing high at­ten­tion in de­vel­op­ing ex­ter­nal out­look of the govern­ment. 2016 will see higher FDI in In­dia from China,” a Chi­nese of­fi­cial said.

How­ever, China feels that there is still some room for im­prov­ing busi­ness en­vi­ron­ment in In­dia.

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