SOUTHERN EYE: Delhi howls, states woo Chinese investments

SOUTHERN EYE: Delhi howls, states woo Chinese investments

Subir Bhaumik,
Subir Bhaumik on Bangali solution

(SouthAsianMonitor Exclusive): Indian states, in perpetual competition to woo investments, have not gone slow in trying to attract Chinese investment. This despite the often hostile exchanges across the Himalayas on issues as diverse as the Masood Azhar ban and the NSG membership or allegations of China violating Indian sovereignty by pushing ahead the CPEC corridor through “Pakistan Occupied Kashmir”.

Contrast the irony in Prime Minister Narendra Modi’s own state Gujarat. Fifty five local trade associations there gave a call to boycott Chinese goods and state’s chief minister Vijay Rupani appealed to people to adopt Swadeshi (indigenous) products last year. But just before the high voltage Vibrant Gujarat summit at year-end, which Modi had started as chief minister to attract investments, a high-level Gujarat government delegation visited China to woo investors. The delegation consisted of senior government officials and representatives of 20 companies who toured China for five days. The state did not send such delegations to any other country.

Rupani is getting results – quite as dramatic as Modi, who courted the Chinese when he was chief minister and when the US refused him visa.

Recently, Chinese conglomerate Sany Group signed an MoU with Gujarat government to invest $2 billion in the next five years in various energy and infrastructure projects in Gujarat.

Sany Group will invest in five different projects, including development of a 1,000-MW wind energy project, another 1,000-MW of wind-plus-solar power generation project, setting up facility to manufacture wind turbines, developing one small-size smart city and setting up a factory to produce pre-cast concrete for the mass housing projects and other real-estate projects.

Sany is a global leader in the development and manufacture of high-quality, industry-leading construction and mining equipment, port and oil drilling machinery, and renewable wind-energy systems.

The first Chinese industrial park in Gujarat – one near Ahmedabad – will be ready soon. It will focus on textiles and attract more than $ 1 billion in investments.

Scores of other Chinese projects worth billions are already up and running or are being commissioned.

Chinese investments have flowed into Maharastra and the southern states in billions, despite bureaucratic hurdles, security objections and so much else. Recently, a top Indian diplomat based in China told me in no uncertain terms – “Chinese investment is crucial for the success of Modi’s Make In India campaign and sooner everyone in Delhi understands this the better.”

But India’s east and northeast have totally missed out on Chinese investments so far. It was partly because state governments in the region have been slow to understand the importance of global capital flows and partly because New Delhi is less than welcoming of Chinese companies seeking to invest in a region where the two Asian giants shared disputed borders, across which huge military formations keep themselves ready for possible war.

An engineer from One Oil India, hailing from Assam, once told me he nearly lost his job when he recommended engaging a Chinese logistics company to move a heavy rig across the mighty Brahmaputra river. The engineer said his research had shown that there were only a few Chinese companies (and hardly any western or Russian company) in the business of moving similar heavy rigs across fast flowing rivers – so he did not really have a choice. But how can you have a Chinese company moving a rig near Sadiya in Assam, not far from the borders separating Chinese Tibet and India’s Arunachal Pradesh! (which the Chinese claim and describe as Southern Tibet). Indian intelligence would surely raise the red flag, Oil India bosses reasoned.

Now, it seems one state government in the East appears determined to break the jinx. West Bengal chief minister Mamata Banerjee, who has wasted a whole five year term in office looking for potential investors in Singapore, Germany and UK (which she visited), has finally lined up around 25 Chinese companies for the forthcoming Bengal Business Summit beginning this week. Chief Secretary Basudeb Banerjee said the Chinese delegation was largely made up of companies from two industry-intensive provinces Jiangsu and Shaanxi. Since some top officials from the foreign affairs and commerce office of these provincial governments are on the delegation, West Bengal is expecting big ticket investments.

The state government has already confirmed participation of big Shaanxi enterprises in the field of coal, chemicals, textiles and fruit and food processing like, Shaanxi Coal and Chemical Industry Group Co. Ltd, China Shaanxi Haihui Import and Export Co. Ltd, Baoji Changxin Cloth Co. Ltd, Shaanxi Haisheng Fresh Fruit Juice Co. Ltd and easy Click Worldwide Network Technology.

The big names are Sinocalci Corporation, AsiaInfo Technologies (Nanjing), Jiangsu HopeRun Software Co. Ltd, Archermind Technology (Nanjing), Nanjing Fujitsu Nanda Software technology Co. Ltd. A Calcutta-based think-tank CSIRD had prepared a detailed report on possible areas of Chinese investments in the region. CSIRD is the nodal organisation in India that handles the Kolkata-Kunming Forum (K2K). Kolkata and Kunming are already sister cities like many other Indian and Chinese cities that have been paired up.

Economists suggest the Chinese, having made big ticket investments in Bangladesh and Myanmar, would naturally be keen to invest in eastern (and if possible, northeastern) India. It makes huge business sense for them in logistics, capital flow and geo-economics. This is also part of the grand Chinese BCIM (Bangladesh-China-India-Myanmar) plan, which plays into its ambitious One Belt One Road (OBOR) vision. West Bengal’s finance and commerce minister Amit Mitra has helmed India’s top business bodies like FICCI before his plunge into politics. It is strange how someone like Mitra has so long missed out on the obvious – go for investment to someone who has capital to spare. He has done so far a wonderful job in boosting the state’s revenue collections – but his record in attracting investments to Bengal has been lacklustre.

Realising pretty well that his state needs big ticket investments to create jobs, Mitra and his boss Mamata Banerjee is now looking north to China. Finance Minister Arun Jaitley has already said that those states who don’t manage their economies well will suffer more in the post-demonetization scenario. The jab was clearly at Bengal, one state which has not only opposed Modi’s demonetization but also immediate implementation of the Goods & Services regime until the adverse effect of demonetization has been managed. Bengal has suffered much in demonetization – thousands of its skilled workers and artisans employed in other states have returned home as employers said they were starved of cash. Mitra and Banerjee realize the importance of job creation in the state .

But will Delhi be comfortable with Chinese investments in Bengal and further east! Sources close to Mamata say they could care less. If the Chinese can go about freely investing in Gujarat and Maharastra, where is the problem to let them invest in Bengal, reason Banerjee’s advisors. She had attacked Modi two weeks ago for backing the Chinese – because PayTm, an Indian payments company with forty percent stake owned by China’s Alibaba, had used the Prime Minister picture in their advertisement for promoting cashless transactions. Now she would reason if Modi’s Gujarat can woo Chinese investments, why can’t Bengal!

So Indian states are not merely competing with each other for seeking investments – they are competing to get Chinese investments. Modi as Gujarat chief minister hijacked the Tata company’s Nano motor car project from Bengal when Banerjee opposed its land acquisition. Now it seems Banerjee is belatedly picking on the lessons of contemporary business.

Subir Bhaumik is a former BBC Correspondent and author