Despite numerous accords having been passed between China and India including six government-level talks on a Bilateral Investment Protection Accord, India's Home Ministry is still hesitant about the accord, citing security concerns as a reason, the International Herald Leader said on Monday, quoting an August 8 report in the Times of India.

 

Speculation is rising that in order to push ahead with the accord, India's Finance Ministry has repeatedly sought out the advice and assistance of the Home Ministry, with the latter proving unresponsive. Under such circumstances, the Finance Ministry is unable to move ahead with the accord, leaving Chinese enterprises investing in India without proper protection.

 

India's security concerns have thwarted several investment attempts by Chinese companies including Hong Kong's Hutchison Whampoa Limited, Huawei Technologies and Zhongxing Telecom (ZTE).

 

Thus, in order to bypass these investment obstacles, Chinese companies have begun favoring those projects that only require an automatic approval to the detriment of those requiring official approval from the India Foreign Investment Promotion Bureau.

 

However, this has also made the Indian government uneasy. In a recent meeting of top Indian government officials, the Home Ministry and the Intelligence Bureau even voiced the suggestion of granting new powers to intelligence services, allowing them to halt any investment plans, following the American model.

 

The frequent abortions of Chinese firms' investment plans in India have to a large extent resulted from the absence of the Bilateral Investment Protection Accord.

 

A source involved with the negotiation claimed the signing of the Bilateral Investment Protection Accord requires amends to India's Foreign Exchange Management Act, which places curbs on investment from China, Pakistan, Bangladesh and Sri Lanka. These neighboring countries have been regarded as potential threats to India's national security, explaining the tension in the Indian government.

 

Some experts say that India's concern about China is a long-standing one and is hard to remove in a short time and that this will inevitably have adverse effects on Chinese companies' investment in India.

 

However, it does not mean that all investment activities by Chinese firms are banned or restricted in India. Over the last two years, the number of agencies set up by Chinese-funded companies in New Delhi, capital of India, has increased several times over. Generally speaking, enterprises engaged in trade meet with less restriction than those investing in telecommunications and port construction for security reasons.

 

On August 9, TCL announced plans to set up a factory in India. When asked why TCL does not meet barriers when investing in India, Wang Chunquan, senior marketing manager of TCL India Holdings Pvt Ltd, a wholly owned subsidiary of Shenzhen-based TCL Corporation, told the International Herald Leader: "TCL sells general consumer electronics like color TVs in India, which has no bearing on national security."

 

Liu Hongqi, president of TCL India, said: "TCL's investment in India can add job opportunities for local people and can also boost India's export and will not likely to fall under interference from India's security departments."

 

In sharp contrast with the treatment Chinese companies receive in India, the Chinese government has been generous in giving out approvals. Following in the footsteps of three Indian software giants TCS, Infosys and Wipro, the State Bank of India (SBI), India's largest commercial bank, also set up a branch in Shanghai on August 11.

 

OM Prakash Bhatt, SBI chairman, showed optimism about the future, saying: "India's investment in China only amounts to US$97 million now and a great increase is beckoning ahead."

 

An official from the Confederation of Indian Industry, an organization that has played an important role in promoting bilateral trade and investment between China and India for many years, said a solution to the harsh treatment Chinese enterprises receive in India and other investment protection related issues will likely occur this November.

 

(International Herald Leader, translated by Yuan Fang for China.org.cn, August 24, 2006)