Updated: July 2, 2020 6:04:57 am
In a move that targets Chinese trade and investments in India, the government Wednesday said it would not allow Chinese companies to participate in highway projects including those through joint ventures and also not allow Chinese investors in micro, small and medium enterprises (MSMEs).
“We will not give permission to joint ventures that have Chinese partners for road construction. We have taken a firm stand that if they (Chinese companies) come via joint venture in our country, we will not allow it,” Union Minister for Road Transport, Highways and MSME Nitin Gadkari told news agency PTI in an interview.
On MSMEs, he said while the effort was to enhance local production capacity, foreign investment was also being promoted.
But here too, Chinese investors would not be allowed. “For upgradation of technology, research, consultancy and other works, we will encourage foreign investment and joint ventures in MSMEs, but in case of Chinese, we will not entertain them,” Gadkari said.
Already, the Central government seems to be moving in the direction. Sources in the Bihar government said a tender for construction of a mega bridge over Ganga at Patna was cancelled. Though technical reasons have been cited for the cancelation, state government sources said “chances of Chinese companies getting the bid” could be the main reason. A fresh tender for the Rs 2,900-crore project, would now open on July 30.
When contacted, Bihar Road Construction Minister Nand Kishore Yadav told The Indian Express, “It is true that five of seven bidders were Chinese companies and five of these companies had been collaborating to get the project. There had been incomplete paperwork and hence the tender was cancelled,” he said.
Separately, the Department of Telecommunications (DoT) on Wednesday formally cancelled the March 23 tender for 4G network installation, planning, testing, and maintenance, floated by state-run Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited’s (MTNL), according to official documents accessed by The Indian Express. The DoT has decided to bar Chinese telecom vendors in the new tender.
These decisions come within two days of the Ministry of Electronics and Information Technology (MeitY) banning 59 apps of Chinese origin including TikTok, UC Browser and ShareIt on national security concerns. It is part of the government’s coercive diplomacy to send a strong signal and message to Beijing that it cannot be business as usual.
Two months ago, in April, the Department for Promotion of Industry and Internal Trade, had made it mandatory for foreign direct investment from neighbouring countries to take prior government approval. The DPIIT move, also targeted at Chinese investments into India, was taken to curb opportunistic takeovers/ acquisitions of Indian companies during times of Covid-19 pandemic, when valuations were at new lows.
According to Gadkari, a policy will be out soon banning Chinese firms and relaxing norms for Indian companies to expand their eligibility criteria for participation in highway projects. There were a few projects undertaken earlier which involved Chinese partners. When asked about this, he said the new decision would be implemented in current and future tenders.
With respect to existing tenders and future bids, Gadkari said rebidding would be done if there were any Chinese joint ventures. “We have taken a decision to relax norms for our companies to ensure that they qualify for bidding in large projects. I have directed the Highways Secretary (Giridhar Aramane) and NHAI Chairman (SS Sandhu) to hold a meeting for relaxing technical and financial norms so that our companies can qualify to work,” he said. Elaborating on it, he said if a contractor can qualify for a small project, he can qualify for a large one too. “Construction norms are not good so I have asked to change it. We are changing it so that we can encourage Indian companies,” he said.
According to him, qualification norms for projects are being rationalised to ensure Indian companies do not require to enter into pacts with foreign partners to grab projects. “Even if we have to go for foreign joint venture in the areas of technology, consultancy or design, we will not allow Chinese,” Gadkari said.
In the telecom sector, the DoT decision to bar use of equipment provided by Chinese telecom vendors could lead to higher costs as well as a delay in the roll out of 4G services by the state-run telcos, which are already behind private operators in implementing the technology. Both BSNL and MTNL do not have a 4G network.
“The costs for us could be 25- 30 per cent higher now if new tender bars them (Chinese vendors). We are also anticipating delay of 2-3 years from normal schedule,” an official said.
According to industry estimates, Chinese telecom gear vendors have a 25 per cent share in the total Rs 12,000 crore domestic market. For both BSNL and MTNL, whose 3G networks mainly comprise equipment from Shenzhen-based ZTE, a shift to European vendors is likely to put further stress on its limited resources.
(WITH INPUTS FROM PTI, AASHISH ARYAN IN NEW DELHI, SANTOSH SINGH IN PATNA)
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