Government allegedly failed to pay up to Rs. 7.7 crore to Chinese contractors

Questions have been raised over the Indian government's Rs. 46.8 crore spending during the six-month Shanghai World Expo, including allegations that the government had failed to pay up to Rs. 7.7 crore (11 million RMB) to its Chinese contractors, sparking strikes last month by workers.

Several officials involved with the Indian Pavilion and the Expo said in interviews that the Indian Trade Promotion Organisation (ITPO), a body under the Ministry of Commerce mandated to handle the event, did not honour contracts with the Chinese builders, leading to several disputes with staff throughout the course of the event, which concluded on October 31.

The ITPO signed a Rs. 24-crore (35 million RMB) contract with China Jingye Engineering Corporation Limited building the pavilion. The Hindu has learned that the ITPO only paid the company 24 million RMB.

Last month, workers from the company switched off power supply to the pavilion, even as visitors streamed in, to protest their salaries not being paid.

While the ITPO has claimed in negotiations that its funding was insufficient, information obtained by The Hindu under the Right to Information Act revealed the ITPO was given Rs. 33 crore (48 million RMB) only for the construction, design and display of the pavilion.

It remains unclear why the ITPO was unable to honour the contract. The ITPO did not reply to questions on the dispute and the costs of construction, which were sent to D.K. Nangia, the pavilion's director, on November 2.

The Shanghai local government and Expo organisers recently convened a last-minute meeting to settle the dispute, even as the Expo closed its doors and demolition work began. Fearing a diplomatic row between China and India, the Jingye company was forced to take a six-million RMB (Rs.4 crore) loss by the Shanghai government.

A contract for 29 million RMB (Rs.19.8 crore) was recently renegotiated. Of this, 24 million RMB has been paid. Five million RMB is due after demolition work concludes.

Several officials affiliated with the project questioned how the remaining Rs. 13 crore was spent on designing and decorating the interiors, given that the pavilion did not feature any high-tech display, besides one hologram projector.

ITPO officials, who requested anonymity, acknowledged that they did face contract disputes, but argued that disputes “were common in China” and were faced by many pavilions at the Expo. The Jingye company, which was involved in at least four pavilions, said it faced a problem only with the Indian pavilion.

In addition to the Rs. 33 crore spent on the construction, design and display, an additional Rs. 13 crore was spent by the ITPO during the course of the Expo, including Rs. 2.5 crore on cultural troupes, at least Rs. 1.25 crore on the deputation of senior ITPO officers and Rs. 2.6 crore on advertising, publicity and media coverage.

A public relations firm involved with the project claimed it had been awarded a Rs. 1.36-crore (2 million RMB) contract, but was still awaiting 500,000 RMB in payment. Publicity activities concluded on October 31.

The ITPO's handling of the Expo has also been questioned by representatives from at least half a dozen China-based Indian companies.

While other pavilions used the Expo to showcase their companies in China and sign deals, Indian companies said they had been almost entirely excluded from the process.

The ITPO rented out stalls in the pavilion for Rs. 75 lakh each to handicraft companies. In a last-minute effort to bring in some private sector involvement, a joint stall of the Confederation of Indian Industries (CII) and eight China-based companies was set up. On three separate visits to the Expo, The Hindu found the stall unmanned and empty.

“If no deals were signed by Indian companies during the Expo,” asked one executive, “you have to ask if you can justify spending $10 million of public money on a six-month-long fair.”

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