Production stalled, MeitY and Commerce want visa norms for Chinese eased

The Department for Promotion of Industry and Internal Trade and MeitY are learnt to have conveyed their demands to the Ministry of External Affairs (MEA).

Industry representatives said the delay in visa approval is hurting the manufacturing industry including the leather sector which is increasingly shifting to sports footwear. Having imported and installed Chinese machinery, the domestic industry is unable to operationalise plants due to visa hurdles.

The issue first cropped up after the Galwan clash in 2020. Since then, alternate ways such as sending Indian professionals to China have not quite worked out as Chinese authorities tend to promptly grant visas to importers but delay applications sent by Indian manufacturers and government officials.

A query sent by The Indian Express to the Commerce and Industry Ministry and the Ministry of Electronics and Information Technology remained unanswered.

‘Chinese technicians affordable’

“We want the government to relax visas for Chinese technicians. The Taiwanese who are improving their productivity and capturing Indian export markets in the leather and footwear sector are doing so with the help of Chinese technicians. The productivity of Chinese professions is of high quality. They will help you produce 150 items with the same resource with which we produce 100,” M Rafeeque Ahmed, Chairman, Farida Group said.

“The Chinese technicians will only stay in India for a year, share the expertise and then return and this is in the interest of our manufacturing. Taiwanese professionals charge four times the Chinese. Vietnamese don’t have the same expertise as the Chinese. A joint venture was supposed to come from China but the visa would have caused a lot of blockages so we transferred the industry to our factory in Bangladesh,” Ahmed said.

Heavy dependence on Chinese machines

The industry needs Chinese professionals since it is heavily dependent on China for crucial parts in most electrical and electronic segments. Official data shows that out of the nearly $100 billion worth imports from China, nearly 60 per cent comprised engineering and electronic items, and these also play a key role in fulfilling India’s export orders.

Engineering Export Promotion Council of India (EEPC) Chairman Arun Kumar Garodia said the council has flagged the requirement of Chinese technicians. “The government is looking into visa norms of Chinese on a case-to-case basis as national security concerns are a strong consideration. Our members are, however, using video conferencing wherever possible to get Indian technicians trained,” Garodia said.

Given the strained geo-political relationship with China, India has imposed strict quality norms to reduce Chinese imports of items of mass consumption as well as intermediate products and is simultaneously promoting manufacturing with the help of the Production Linked Incentive Scheme (PLI) in strategic areas.

‘MSME slowdown root cause’

“Earlier, the MSMEs would hire polytechnic and Industrial Training Institutes (ITI) graduates and train them on the job with skills required in the factory floor. But MSMEs faced a major slowdown and corporate growth far outstripped that of MSMEs following the economic shocks of GST, demonetisation and Covid-19. As a result, movement of technicians from MSMEs to corporates is not happening, creating a serious shortage of skills in the industry,” former Chief Statistician Pronab Sen said.

Sen said GST is a step in the positive direction but more time should have been given to the MSMEs to adjust to the new policy. The government should look into the extent of stress in the MSME sector and undertake measures to address the skill gap in various sectors so that Indian industry is not reliant on China for technicians.

Different visa norms for Chinese nationals

India allows entry of foreign nationals for business-related activity under the ‘employment’ and ‘business’ visa categories. While the employment visa gives access to skilled and qualified professionals for “one year at a time”, business visas are given with a “validity of five years” to individuals who aim to set up industrial or business ventures in India.

For Chinese nationals, however, only single-entry tourist and business visas valid for up to three months are issued. All other types of visas including employment visas fall in the “prior clearance category”. Moreover, as per the Ministry of Home Affairs, an employment visa “shall not be granted” for jobs for which “qualified Indians are available”.

Industry sources said the government is allowing limited entry of Chinese professionals in PLI schemes, but several manufacturers are often forced to move manufacturing to alternate geographies such as Bangladesh where there are no such restrictions.

‘China blocks Indian professionals’

Vijay Kalantri, Chairman and President of All India Association of Industries, said the dependence on Chinese technicians is a result of a deteriorating manufacturing base in the country over the years and high dependence on imports from China which follows unfair trade practices when it comes to visa approvals.

“Visas are a problematic issue between India and China. The Chinese tend to approve visas applied by Indian importers but delay or block visa requests by government officials and exporters. Similarly, Indian companies find it difficult to get Chinese technicians in India. Our members have asked MeitY and the commerce ministry to allow entry of Chinese professionals only to those particular companies whose products we are importing,” Kalantri said.

‘Idle capacity due to policy change’

The Federation of Indian Export Organisations (FIEO) has also raised concerns with the commerce and industry ministry over the visa hurdles that have left several plants idle causing losses to the industry and unfilled export orders.

“The industry has already imported the plant and it remains an idle asset. We are delaying production. Technicians have to commission the plant after it is imported. If visas are not given, the Indian companies cannot enforce the contract with the Chinese exporters. And unless the plant is commissioned, the production cannot commence,” Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai.

He said the government’s concern is valid but the industry is seeking short-term visas for the Chinese technicians to help the commissioning of the plant and is willing to take safeguards as per regulations.

“This is something that is affecting our industry and investments. The industry started flagging these concerns after the Galwan standoff and representation was made to the government,” Sahai said.

FDI restriction on China

The border standoff after the Galwan clash in 2020 has seen several measures announced by the government to limit Chinese influence on the Indian economy. The most prominent was the amendment brought about in the FDI policy under Press Note 3 (PN3). The modification in PN3 brought the investment in India from land bordering countries under the government route.

As per official figures, India approved only a quarter of the total 435 foreign direct investment applications from China till June last year since the modification in press note 3 was introduced in April 2020. However, China contributes only a fraction of the total FDI equity inflows into the country. China stands at the 20th position with only 0.43 per cent share or $ 2.45 billion in total FDI equity inflow reported in India from April 2000 to December 2021, as per the commerce and industry ministry.