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How India's economic offensive cost China over Rs 51,000 crore so far

After 20 soldiers were killed in border clashes, India has resorted to what increasingly looks like a trade war with China, targeting Chinese companies and projects in India 

Ashish Pandey | July 3, 2020 | Updated 22:13 IST
How India’s economic offensive cost China over Rs 51,000 crore so far
Chinese President Xi Jinping

When Prime Minister Narendra Modi on Wednesday removed his account from China's social media platform Weibo, the message was clear that India would not hesitate to step up economic offensive going ahead. A day later, Union Minister Nitin Gadkari followed it up with an announcement that Chinese companies will not be allowed to participate in highway projects, including those through joint ventures. Gadkari also said the government will ensure that Chinese investors are not entertained in various sectors like Micro, Small and Medium Enterprises (MSMEs). "Even if we have to go for foreign joint venture in the areas of technology, consultancy or design, we will not allow Chinese," he added.

While the military standoff continues at the China border, the Indian government has focussed on the economic route to counter China's aggressive posture at the Line of Actual Control (LAC) which recently saw the death of 20 Indian Army personnel. In the past few days, the government has ensured that it restricts economic opportunities for Chinese firms in India.

FDI restrictions

Even before the violent skirmish at LAC, the Indian government, in April, amended the rules for foreign direct investment (FDI) from bordering nations without naming China. The government had removed FDI coming in from that country via automatic route, fearing hostile takeovers. "An entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the  government route," the notification said.

Ban on apps

The government last week announced a ban on 59 Chinese apps, including popular apps such as TikTok, Shareit, Helo to counter the threat posed by these applications to the country's "sovereignty and security." The list also includes other commonly used apps such as UC Browser, Xender, SHAREit and Clean-master. Shopping portals such as Shein and Club Factory and gaming apps such as Clash of Kings have also made it to the list. The action by the government made headlines globally. According to Global Times, Chinese internet company ByteDance - the parent of the TikTok and Helo apps - could lose up to $6 billion or nearly Rs 45,000 crore after the ban.

Maharashtra pauses Chinese projects

Chief minister Uddhav Thackeray-led Maharashtra government has put on hold three Chinese projects worth Rs 5,000 crore. Of the 12 MoUs agreed upon in the Maharashtra investors' event held before border standoff, three were with China - a project with Hengli engineering worth Rs 250 crore, one with Great Wall Motors worth Rs 3,770 crore and a project with PMI electromobility worth Rs 1,000 crore.

Haryana cancels thermal power station contracts

The Haryana government cancelled the thermal power station contracts issued to two Chinese companies. The thermal power plants are in Yamunanagar and Hisar. During the bidding process for both these plants, Chinese companies had won the bid and secured the contracts worth Rs 780 crore.

Railways terminates contracts

A major blow for Chinese investment in India came from the Indian Railways after the border clashes. The Indian Railways terminated a signalling contract worth Rs 471 crore awarded to a Chinese company in 2016. The contract, awarded to Chinese company Beijing National Railway Research and Design Institute of Signal and Communication Group, was funded by the World Bank.

Telecom contracts cancelled

Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) cancelled their 4G upgradation tenders issued in March. It is not just cancellation of contracts but an opportunity lost in 5G as the Indian government has advised even private firms to not buy Chinese equipment. After much deliberation, the Centre last December decided to allow Huawei to take part in the 5G trials.

Blocking of goods by customs

Import consignments from China are facing clearance delays at some ports including Chennai and Mumbai. While there is no confirmation over any such official directive, industry representatives say the message is clear - don't deliver goods originating from China until further orders.  The custom authorities also indicated to importers that there would be delays in clearing shipments as checks were being conducted on basis of specific intelligence based inputs.The additional scrutiny of imports has begun to disrupt operations at plants owned by Apple supplier Foxconn, among others.

Chinese imports

India's trade with mainland China and Hong Kong declined by over 7 per cent to $109.76 billion in FY20, its steepest fall since FY13. It is a sharp reversal from the 3.2 per cent growth in trade in 2018-19 and the more robust 22 per cent jump in FY18, signalling the prevailing anti-China sentiment in the country. A lot of business with mainland China is also conducted via Hong Kong.

GeM

The government last month made it mandatory for sellers to enter the country of origin while registering all new products on Government e-Marketplace (GeM). The revised rule is expected to make it difficult to sell Chinese goods on the dedicated online trading platform for state-run agencies - Government e-Marketplace (GeM).

"GeM has also enabled a provision for indication of the percentage of local content in products. With this new feature, now, the Country of Origin as well as the local content percentage are visible in the marketplace for all items," Ministry of Commerce and Industry said.

UP bans Chinese electricity meters

Chief Minister Yogi Adityanath-led Uttar Pradesh government has been vocal against the imports from China and stepped up policy to boycott Chinese companies. The state government has imposed a ban on the installation of new China-made electricity meters by the state Power Department.

Bihar cancels mega bridge contract

The Bihar government cancelled a tender for construction of a new mega bridge parallel to Patna's iconic Mahatma Gandhi Setu because two of the four contractors selected for the project had Chinese partners.

Also Read: Mumbai's Nanavati Hospital charges Rs 17 lakh for COVID-19 treatment; BMC files FIR

Also Read: ICMR aims to launch India's first coronavirus vaccine by August 15

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