Despite numerous accords having been passed between China and
India including six government-level talks on a Bilateral
Investment Protection Accord, India's Home Ministry is still
hesitant about the accord, citing security concerns as a reason,
the International Herald Leader said on Monday, quoting an
August 8 report in the Times of India.
Speculation is rising that in order to push ahead with the
accord, India's Finance Ministry has repeatedly sought out the
advice and assistance of the Home Ministry, with the latter proving
unresponsive. Under such circumstances, the Finance Ministry is
unable to move ahead with the accord, leaving Chinese enterprises
investing in India without proper protection.
India's security concerns have thwarted several investment
attempts by Chinese companies including Hong Kong's Hutchison
Whampoa Limited, Huawei Technologies and Zhongxing Telecom
(ZTE).
Thus, in order to bypass these investment obstacles, Chinese
companies have begun favoring those projects that only require an
automatic approval to the detriment of those requiring official
approval from the India Foreign Investment Promotion Bureau.
However, this has also made the Indian government uneasy. In a
recent meeting of top Indian government officials, the Home
Ministry and the Intelligence Bureau even voiced the suggestion of
granting new powers to intelligence services, allowing them to halt
any investment plans, following the American model.
The frequent abortions of Chinese firms' investment plans in
India have to a large extent resulted from the absence of the
Bilateral Investment Protection Accord.
A source involved with the negotiation claimed the signing of
the Bilateral Investment Protection Accord requires amends to
India's Foreign Exchange Management Act, which places curbs on
investment from China, Pakistan, Bangladesh and Sri Lanka. These
neighboring countries have been regarded as potential threats to
India's national security, explaining the tension in the Indian
government.
Some experts say that India's concern about China is a
long-standing one and is hard to remove in a short time and that
this will inevitably have adverse effects on Chinese companies'
investment in India.
However, it does not mean that all investment activities by
Chinese firms are banned or restricted in India. Over the last two
years, the number of agencies set up by Chinese-funded companies in
New Delhi, capital of India, has increased several times over.
Generally speaking, enterprises engaged in trade meet with less
restriction than those investing in telecommunications and port
construction for security reasons.
On August 9, TCL announced plans to set up a factory in India.
When asked why TCL does not meet barriers when investing in India,
Wang Chunquan, senior marketing manager of TCL India Holdings Pvt
Ltd, a wholly owned subsidiary of Shenzhen-based TCL Corporation,
told the International Herald Leader: "TCL sells general
consumer electronics like color TVs in India, which has no bearing
on national security."
Liu Hongqi, president of TCL India, said: "TCL's investment in
India can add job opportunities for local people and can also boost
India's export and will not likely to fall under interference from
India's security departments."
In sharp contrast with the treatment Chinese companies receive
in India, the Chinese government has been generous in giving out
approvals. Following in the footsteps of three Indian software
giants TCS, Infosys and Wipro, the State Bank of India (SBI),
India's largest commercial bank, also set up a branch in Shanghai
on August 11.
OM Prakash Bhatt, SBI chairman, showed optimism about the
future, saying: "India's investment in China only amounts to US$97
million now and a great increase is beckoning ahead."
An official from the Confederation of Indian Industry, an
organization that has played an important role in promoting
bilateral trade and investment between China and India for many
years, said a solution to the harsh treatment Chinese enterprises
receive in India and other investment protection related issues
will likely occur this November.
(International Herald Leader, translated by
Yuan Fang for China.org.cn, August 24, 2006)