China recently put a hold on India’s plea to sanction the militant group “Jaish-e-Mohammed” chief Masood Azhar at UN Security Council. This triggered a violent reaction in India. Following the National Federation of Indian traders’ threat to boycott “Made in China”, Indian media on April 5 reported that country’s security department is re-considering the “friendly policy” towards Chinese investment, including the re-evaluation of the security clearance issued for Chinese investment projects. The Indian side even stated that they want to discuss whether or not to include China in the “national concern” list. Regarding this, on April 5 in an interview to “Global Times” reporter, the Indian Embassy in China said that they weren’t aware of this information and since this news didn’t come from government sources, it couldn’t be confirmed.
According to Economic Times April 5 report, an Indian security department official said that due to China’s “refusal to cooperate on the core issues of India’s national security,” they are considering to reassess the “friendly policy” towards Chinese direct investment in India. “Times of India” said that the Indian government has given around 25 Chinese companies security clearance in the past two years for projects mostly in power, telecommunications, railways and other spheres. Indian security officials said, “This should not be one-way only. If China hinders our security concerns at the international arena then perhaps we should, in accordance with our national safety regulations re-evaluate the security permit provided to Chinese investors and at least re-consider those investment projects which are waiting in line for security clearance.” Currently four Chinese investment projects are waiting to acquire the permit. India’s Daily News and Analysis website on April 5 said that the officials of the security department, internal affairs and power, telecommunications and other departments recently held a meeting to make a decision.
India TNN television on Wednesday reported that the Modi government has taken a number of key initiatives in promoting relations with China over the past two years, including the removal of China from the “national concern” list. Previously many Chinese investment projects had been rejected because of national security concern. In addition Modi government also sped up the pace of security clearance for Chinese direct investment projects. Earlier it usually took 3-6 months. Economic Times said that after Modi government came to power, the view towards Chinese investment changed from “security concern” to “red carpet welcome”. According to The Times of India, now the Indian side is again considering to put China in the “national concern” list.
“Times of India” quoted Indian security officials as saying that “We should re-examine the policy of encouraging Chinese investment and again look at the Chinese companies in all the spheres, including Huawei, which have received security clearance in the last few months.” According to latest data from Industrial Policy and Promotion Bureau under the Indian Commerce Ministry, India obtained $330 million Chinese investment between January and September 2015.
On April 5, a Chinese Embassy official in India who understands India-China trade told this “Global Times” reporter that the Embassy did not completely understand the meaning of Indian media reports. Security review of Chinese companies by India does exist and in the past two years, due to the push from both the governments, Indian side had taken a relaxed view of the security concern. According to feedback given by Chinese companies to the Embassy, the environment has indeed improved. However, the official said that India’s business environment still needs to improve further. Labor and work visa issuance and renewal are very complicated areas, which are reflected in the practical difficulties faced by enterprises. But they are also improving slowly.
On April 5 Hu Zhiyong, a researcher from Institute of International Relations in Shanghai Academy of Social Sciences, told this “Global Times” reporter that in general India’s requirements for foreign enterprises is comparatively more stringent such as foreign companies must recruit 20-30 percent of their staff locally. The investigation process for Chinese companies is also more stringent as compared to other countries. President of the Chinese Association for South Asia, Sun Shihai believes that although, there are a number of sensitive areas in India which are restricted or even guarded against China; and may even be restricted towards some individual companies, overall India is welcoming of Chinese investment. It is unlikely that they will tighten the policy because their development need Chinese capital and technology. In these past two years the scale of economic cooperation between China and India has been growing and the speed of development has been increasing. State level local governments in India are also actively attracting Chinese investment. Hu Zhiyong said that if India changes its investment policy, Chinese companies may think twice about their expansion plans in India as the cost of investment in India may increase resulting in less investment from China. Presently, India needs Chinese investment for developing its infrastructure and other areas.
Sun Shihai said that the Indian media knows that China is more concerned about economic issues and therefore they use this subject of re-examining Chinese investment policy to create hype. Hu Zhiyong believes that it cannot be ruled out that Indian opposition parties may use this kind of news to put pressure on Indian government.
In the “Times of India” website, regarding the re-examination of China’s investment policy news, there were close to 400 comments and most people expressed their support for “reconsideration”. But Singh, a netizen, reminded people that the decision of not welcoming Chinese investment in a major decision that must not be made hastily and it should not be swayed by personal feelings because it will have a profound impact on the Indian economy. Further that in the Indian market there are many products which are made in China, many companies are using raw materials which come from China and tightening Chinese investment may make millions of Indians bankrupt or unemployed.
“Economic Times” said Indian Foreign Minister Sushma Swaraj will participate in the India-China-Russia trilateral meeting being held in Moscow later this week, during which she will be raising the issue of China blocking India’s bid for inclusion of the Punjab Air Force base attack suspect Masood Azhar in the UN sanctions blacklist with her Chinese counterpart. Earlier Chinese Foreign Ministry spokesperson Hong Lei responded on this issue by saying that China always dealt with the listing issue on facts and based on the 1267 Committee listing rules in accordance with UN Security Council Resolutions and the relevant Rules of Procedure. China has always maintained communication with all the concerned parties related to the issue.