India stands to lose more than gain if it tightens its security checks on Chinese firms after Indian media claimed the country is considering scrapping security clearance to Chinese companies, analysts warned.
Hu Zhiyong, a research fellow with the Institute of International Relations at the Shanghai Academy of Social Sciences, told the Global Times that India stands to lose if it tightens security reviews of Chinese firms.
“Chinese companies may think twice about their expansion plans in India over the possible security clearance review. Thus, India’s development, which relies on China to improve its poor infrastructure, will be hindered,” Hu said.
According to a report in Indian newspaper Hindustan Times on Tuesday citing official sources, India’s home ministry was reconsidering its security clearance for Chinese firms in India, and might cancel all proposals from Chinese firms cleared in the past nine months.
The review move was allegedly made after China “blocked” a move to put “Pakistan-based Jaish-e-Mohammed militant group chief Masood Azhar on the UN sanctions list four days ago,” as India believes that Azhar should be held responsible for the January attack of an Indian air force base, located on the Indian-Pakistani border, the report said.
A Chinese embassy official familiar with China’s overseas investments told the Global Times that India’s security clearance of Chinese firms has been showing signs of relaxing in recent years, especially after Narendra Modi became prime minister in 2014 and India Minister of Home Affairs Rajnath Singh’s visit to China last November.
“Although India conducted a security review of Chinese firms, Chinese companies in India say the general business environment is improving, and the Chinese companies’ feedback is positive,” the official who requested anonymity said.
The Indian government has given around 25 Chinese companies security clearance in the past two years for projects mostly in power, telecoms, railways and infrastructure, the Hindustan Times reported.
Several Chinese companies that set up offices in India, including telecommunications giant Huawei Technologies, declined to comment on Tuesday on India’s security review. ZTE, another telecoms company, told the Global Times on Tuesday that it has no information to offer since its Indian branch did not report any security clearance issues.
Sun Shihai, vice director of the Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences, said that the Indian government is unlikely to tighten its policies toward all Chinese investments, but it may pick on some Chinese companies.
India’s policies on foreign investments are strict, which includes a 20 to 30 percent Indian manpower requirement at foreign firms, according to Hu.
The Chinese Embassy official said that the business environment in India still needs to be improved, such as simplifying the visa application requirements for Chinese employees.
“The cumbersome and lengthy process of applying for and renewing an employment visa has caused trouble for many Chinese companies in India,” the official said.
Differences between China and India in other fields should not threaten China-India trade and commerce, Lan Jianxue, an associate research fellow at the China Institute of International Studies told the Global Times.
China announced an increase to $20 billion in investments in Indian industrial and infrastructure projects in the next five years when Chinese President Xi Jinping visited India in 2014, the Xinhua News Agency reported.