Hoping to give a leg up to the Chinese investments in India, Small and Medium-sized Enterprises (SMEs) from China are planning to invest $1 billion across various states in sectors ranging from telecommunications to electrical equipment to appliance manufacturing and machinery as part of President Xi Jinping’s announcement in 2014 of investing $20 billion in India in five years.

While there was a decline of Chinese investments in India in 2015, Beijing is hoping to increase the quantum of its Foreign Direct Investment (FDI) in India in the current year to boost economic partnership, notwithstanding differences over strategic issues including Pak-based terror.

Ahead of what can be described as a China week, with the Defence Minister and NSA travelling to Beijing and External Affairs Minister Sushma Swaraj’s meeting with her Chinese counterpart in Moscow, senior Chinese government sources told that China is revising its proposal for two industrial parks in Gujarat and Maharashtra with additional capital and planning to invest $6.8 billion in these two facilities.

In the electricity-industrial park of Gujarat, certain factories such as Tebian Electric Apparatus have been launched. In the automobile-industrial park of Maharashtra, some additional capital has been invested, according to the Chinese government sources.

Besides these parks and new industrial city by Dalian Wanda Group in Haryana, China Small and Medium Enterprises Investment Group (CSMEIG) has signed MoU for setting up an industrial park with the Gujarat government. The total investment plan in this industrial park is $1billion.

The amount of non-financial investment from China to India has been registered at $589 million between May 2014, when Narendra Modi government came to power, and until January 2016, according to the Chinese government sources familiar with the developments. Prime Minister Modi has also assigned officials to specifically deal with Chinese investments.

There is a specific China desk in the Department of Industrial Policy & Promotion (DIPP), besides dedicated desks for Japan, South Korea, USA and Canada.

While admitting that the investment from China to India witnessed a decline in the first half of 2015, Chinese officials claimed that the rapid growth came back in the second half.

“Throughout the year 2015, the non-financial direct investment from China to India was $143 million,” an official informed. In 2014, non-financial direct investment from China was $220 million. And at the end of 2015, the cumulative non-financial direct investment from China to India touched $3.55 billion.

According to Chinese government, there are currently more than 300 Chinese companies in India that includes Huawei, TBEA, ZTE, Sany, LiuGong Machinery and Haier Group. The footprints of Chinese firms are expanding in textile, food processing and automobile sectors.

China is relatively satisfied with the pace of reforms under the Modi government. “The Modi government is not only making efforts in improving the governing capacity, simplifying administration and moving forward the reforms internally, but is also paying high attention in developing external outlook of the government. 2016 will see higher FDI in India from China,” a Chinese official said.

However, China feels that there is still some room for improving business environment in India.

Source: The Economic Times