India cannot afford to snub
China By Siddharth Srivastava
NEW DELHI - On Thursday, the Indian
government issued modified guidelines for the
quick granting of visas to Chinese nationals and
extensions of their stay in India. The new
guidelines shorten the period for clearing visa
applications from a long three months to just two
weeks.
The move by New Delhi could be seen
as another example of the growing business and
political bonds between India and China, except
that the changes have followed considerable
pressure from
the
biggest business entity in the country, Reliance
Industries Ltd.
RIL made history on
Thursday by becoming the No 1 company in India in
terms of market capitalization (US$35.7 billion),
displacing public-sector giant Oil and Natural Gas
Corp from that position.
RIL chairman
Mukesh Ambani thus had little trouble calling on
Home Minister Shivraj Patil on Monday. Ambani had
sought the meeting to plead for the quick visa and
immigration clearance of nearly 2,000 Chinese
technical executives that RIL has hired for a
gas-pipeline project.
Ambani is keen that
the 1,400-kilometer pipeline project for
transporting gas from the Krishna-Godavari basin
to Gujarat keep to its 2009 deadline. Northern
India is considered a particularly lucrative
market for gas because it is home to a large
number of fertilizer companies that are
traditional gas-guzzlers.
The Chinese
expertise will be provided via the China Petroleum
Pipeline Engineering Corp, with which RIL has
signed a contract. When completed, the pipeline
will transport 40 million standard cubic meters of
gas a day.
Security issues have prevented
New Delhi from allowing Indian companies to hire
foreign labor, especially from China, on a large
scale.
The government's quick action on
Ambani's request reflects the sensitivity of the
government to business interests. But on the other
hand, it is an indicator that a lot of cobwebs and
doubt still exist about allowing the Chinese
access to India. Change only seems happen when
there is pressure from the likes of Reliance.
It is well known that powerful sections
within the Indian government are reluctant to
allow unbridled Chinese presence in the country,
because of what they consider to be security
considerations.
In its top story, The
Economic Times reported that the government is
proposing to put China on the list of countries
categorized as a security risk from the standpoint
of foreign direct investment (FDI).
"This
means FDI from China will not get automatic
clearance even if it goes into an innocuous
segment like [fast-moving] consumer goods. Till
now, only Pakistan and Bangladesh were not being
given the benefit of the policy of automatic
approval of foreign investment proposals.
Investments from North Korea, Taiwan and
Afghanistan are also being included in the
sensitive list,'' the paper says.
Recently, such misgivings about the
Chinese presence in telecoms have extended to
ports. They derailed the Indian plans of Hong
Kong-based Hutchison Port Holdings, a unit of
Hutchison Whampoa. In the past, Chinese telecom
firms Huawei Technologies and its rival ZTE Corp
have been refused permission by the Foreign
Investment Promotion Board to invest in India.
India has rejected the bid of China Harbor
Engineering Co for the Vizhinjam port near
Thiruvananthapuram as the company in question is
also developing Pakistan's Gwadar port, which
opens the possibility of a Chinese naval presence
next to Indian borders. But there is reason to
hope for more relaxed relations. The crucial
leftist parties in India's ruling coalition love
China as much as they hate the United States and
have been rooting for the former. Leftist leaders
are aggressively lobbying to force the government
to allow Chinese multinationals into strategic
sectors, even as they vehemently oppose the
Indo-US nuclear deal.
Ahead of Chinese
President Hu Jintao's visit to India this month,
Communist Party of India (Marxist) leader Sitaram
Yechury is leading a high-level delegation of his
party to China on a goodwill visit. The Indian
left has enjoyed a long-standing relationship with
the Chinese Communist Party.
Last month,
CPI (M) general secretary Prakash Karat vehemently
spoke in favor of Chinese investment in Vizhinjam:
"The tenders had been cleared, the prime minister
was expected to lay the foundation stone and the
work was about to begin. But suddenly they found
that Chinese companies could not be given security
clearance.
"Are the US companies which
have projects in Pakistan disallowed to take up
port projects in India? If you are allowing other
countries to bid, why stop China? If American
companies can take up work both in India and
Pakistan, why bar the Chinese companies?'' Karat
asked.
Indeed, despite New Delhi's
selectively blocking of Chinese investments in
certain sectors, industry figures suggest that
Chinese firms have established a substantive
presence in many key Indian infrastructure sectors
worth nearly $2 billion and climbing rapidly.
The Delhi Metro has a distinct Chinese
presence. Wuhan Research Institute of Posts and
Telecommunications has tied up with Himachal
Exicom Communications for "in-building and tunnel
projects'' for Delhi Metro Rail Corp. The proposed
Chennai monorail project, too, will have a
significant Chinese presence.
The National
Highways Authority of India has tied up with at
least two Chinese companies, China Coal
Construction Group and Longjian Road and Bridge,
to build National Highway 2.
The Chinese
company Dongfang is working on thermal-power
projects in West Bengal and in Andheri, Mumbai;
Grasim and Ultra Tech Cement are in collaboration
with China National Machinery Co.
New
Delhi knows it cannot go too far in shutting China
out of India. Indian information-technology
companies are looking to win a chunk of the $10
billion Chinese technology contracts on offer in
2006 alone and would hate for Beijing to step in
and block their chances in retaliation.
Commenting about proposed restrictions on
FDI on security grounds, Commerce Minister Kamal
Nath recently said: "The matter is not stuck. We
are looking into it. The regulatory structure
being thought about is not specific to just India.
Countries like the US have it. We are building a
regulatory framework not that different from
theirs."
India is on course to attract $12
billion FDI in 2006-07, but it has a long way to
go to match its neighbor China, which is
consistently clocking more than $60 billion in
annual investment. McKinsey & Co has estimated
that India needs more than $250 billion in
infrastructure investment over the next decade.
The Planning Commission has said the country needs
and can absorb $16 billion of FDI annually.
Siddharth Srivastava is a New
Delhi-based journalist.
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2006 Asia Times Online Ltd. All rights reserved.
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