On a mission to attract investment for infrastructure projects, Karnataka Chief Minister B. S. Yeddyurappa’s business delegation to China has found itself facing a battle to change Chinese perceptions of the difficulties of investing in India.
Mr. Yeddyurappa is visiting Beijing, Shanghai and Guangzhou with a sales pitch that is showcasing a number of new infrastructure projects in the State looking for investment from manufacturing companies. A number of Chinese companies have already invested in Karnataka, most famously Chinese telecom giant Huawei, which has a $100 million R&D centre in Bangalore.
Mr. Yeddyurappa told a group of Chinese engineering and telecom companies on Thursday that his State was looking for Chinese companies to help develop new port projects and highways. Chinese investment in India’s infrastructure has risen in recent years, and is being seen as a way to reorient the trade relationship between the two countries that is now skewed in China’s favour. Bilateral trade reached $51.8 billion last year, of which Indian exports were $20 billion, largely driven by iron ore shipments.
“It is not just bilateral trade that is increasing, so is mutual investment,” said Yu Ping, Vice-Chairman of the China Council for the Promotion of International Trade (CCPIT). “India is becoming an important investment market for Chinese companies”.
He said in the first half of this year alone, Chinese engineering companies had secured $4 billion worth of contracts. But many companies here say despite opportunities in the Indian market, especially for infrastructure projects, problems in securing visas and more recently, perceptions that Chinese companies have restricted market access, have made companies wary of investing in India.
The Indian Government’s recent moves to increase regulation on telecom equipment suppliers because of security concerns made news in China, given that Huawei is the most cited success story of Chinese ventures in India.
“There are already many challenges in starting operations overseas, but when there are concerns of restricted access, we are cautious of making investments,” said Liu Zhaofeng of Datang Telecom, a well-known telecom equipment vendor here.
Other companies said delays in getting employment visas was another factor that made Chinese companies think twice before committing big investments. “Many projects end up facing delays especially in the monsoon season, and engineers are left stranded as visa processing takes too long,” said Zhang Rixin of the Shougang engineering company which is involved in iron and steel projects in Orissa and Karnataka.
India’s new Ambassador to China S. Jaishankar told the companies that he would take up visa issues with the authorities and that the speed of issuing visas would be hastened.