Beijing keen on investments in India,seeks govt guidance

Given India’s interest in roping in foreign direct investment in infrastructure sectors,a background note has been prepared and circulated for inputs from ministries of Home Affairs and External Affairs,ministry documents said.

But considering the security and political ramifications of the large neighbour’s “expression of interest”,the National Security Advisor Shiv Shanker Menon would also be kept in the loop on the follow-up action,the papers said.

China’s direct investments in India are currently carried out through state-owned and private enterprises and have so far been commercially driven,and not strategically motivated by the Chinese government.

Though it is still early to fathom the extent of the Chinese interest,India’s Finance Ministry is not ruling out investment by China Investment Corp,the sovereign wealth fund managing part of the People’s Republic of China’s foreign ex change reserves.

“That is why we are sending a copy of the backgrounder to our Capital Market division as well as the Department of Financial Services (which handles banking) and the Reserve Bank of India for inputs,” said sources.

The target areas for China would be identified after getting inputs from the various ministries and departments,they said. However,given the state of play between the two Asian giants,the Indian go-ahead would be cleared at the highest levels,they added.

At the Fifth India-China Financial Dialogue,both sides committed themselves to enhance the dialogue process to “deepen mutual cooperation to achieve practical outcomes and strengthen strategic mutual trust”.

China,which is often criticised of exploiting natural resources of African nations through controversial investments backed by welfare funding,is often viewed with an eye of suspicion by the governments of host countries.

In India’s case,the distrust is heightened because of a brief border war between the two in 1962. Tensions between them continue over Line of Actual Control and China still claims much of Arunachal Pradesh as its own. China is also an all-weather ally of Pakistan with no less than 130 projects in Pakistan-Occupied-Kashmir.

However,with about a trillion dollars of investments expected in the Indian infrastructure in the next five years,there are a number of business opportunities for China,especially in infrastructure projects,dedicated freight corridors,subway lines and SEZs being created through Public Private Partnerships.

On the other hand,with the way the global economic growth has weakened and downside risks have heightened due to uncertainty over the sustainability of sovereign debts in developed economies,India has a relatively stronger growth and the only attractive destination,other than China,for long term investment.