Willing to address concerns over SEBI cap on foreign investment

India on Wednesday told China's biggest investment and engineering companies that it was open to greater Chinese involvement in highway projects, even in border areas.

The Indian Government was also willing to address Chinese concerns over cap on foreign investment under Securities and Exchange Board of India (SEBI) regulations by looking into the possibility of negotiating an economic cooperation agreement in future, Minister of Road Transport and Highways Kamal Nath told Chinese officials.

On Wednesday, Mr. Nath held meetings with officials from some of China's biggest investment firms, encouraging them to step up investment in road projects. He said India had no opposition to Chinese involvement in highway projects in the northeast and Jammu and Kashmir, where India recently awarded a project to a Chinese joint venture. India has recently voiced concerns over Chinese projects in Pakistan-occupied Kashmir, citing security reasons.

“The Government of India cleared [the project in Jammu and Kashmir] from a security point of view,” he said. “We have no such concerns…We awarded the contract because Chinese involvement is in terms of investment, project management and technology. They were not sending people there to dig roads, so there was no issue.” Some of the concerns of Chinese firms looking to invest, he said, revolved around a 10 per cent cap in investment for publicly-traded companies under SEBI regulations. Since many of China's players in the sector are State-run, such as the China Investment Corporation (CIC), the State-run sovereign wealth fund, and the Social Security Fund (SSF), they would be regarded as under the same ownership.

Singapore experience

India worked around this problem with Singapore, where Temasek Holdings and the Government Investment Corporation (GIC) sought involvement in projects.

Under an economic cooperation agreement, India agreed to treat State-owned entities as independent investors.

Negotiating a similar agreement with China, Mr. Nath said, was a possibility. “I will take back [their concerns] to our government,” he said. “[But] it is for ministries concerned and for the Prime Minister to address this issue at an appropriate level.”

Mr. Nath said Chinese engineering firms had “recognised that there are huge opportunities in India,” and were “surprised” that India had awarded as many as 188 highway projects with a combined length of 7,500 km this year.

Another concern often voiced by Chinese firms involves visas for workers. Indian officials had earlier this year instituted a one per cent cap for Chinese workers, to limit the number of unskilled labourers on infrastructure projects and to get Chinese firms to hire locally.

Indian officials said they had now instituted a new visa regime to issue employment visas only for skilled workers, doing away with the one per cent cap. The process had been streamlined, officials said, reducing the number of Chinese workers on projects as well as limiting involvement at technical and management levels.

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