While trade has taken off, we seem to be prisoners of the old mindset
when it comes to Chinese investments in India. Huawei Technologies,
the Chinese telecom networking major already employs over 500 Indian
software professionals in Bangalore but it has already caused concern
in the Indian security establishment. We are approaching its expansion
plans very warily. The Chinese consumer goods giant Haier, whose colourful
CEO’s life has recently been captured on celluloid, has been attempting
to set up a production base in India but finds itself stymied for one
reason or the other. Hutchison Port Holdings has just been debarred
from participating in a major port development project with blue-chip
Indian partners apparently on strategic objections by the Indian navy.
Hutchison Telecom’s pre-eminent position in the Indian mobile telephony
market has is causing much discomfort to policy makers. There have been
reports that Chinese companies are being discouraged in investing in
hydel projects in “border” states like Himachal Pradesh, quite apart
from also in road projects in states like Tamil Nadu. A Chinese company
has evinced interest in the privatisation of the aluminum giant NALCO
in Orissa causing some concern in official circles but that sale appears
to have been aborted for the time being.

Indian ambivalence-more precisely, the ambivalence of the central government
in its myriad forms-on Chinese investments in India is coming at a time
when Indian companies are aggressively scouting for investment opportunities
themselves in China. TCS is a leading candidate for bagging the prestigious
contract for the computerisation of the Shanghai stock exchange. Ranbaxy
was an early investor in China. TCS and NIIT already have a presence
and Infosys has talked about an investment, although its plans unveiled
with great fanfare in the presence of Zhu Rongji during his visit to
Bangalore in January 2002 seem to have been delayed. Interestingly,
Infosys blames the Chinese bureaucracy for the slow take-off but there
may well be other contributory factors. Of late a slew of companies
like Apollo Tyres, Sundram Fasteners and SRF have joined the investor
community in China. Others like Dr. Reddy’s Laboratories, JK Tyres and
Aurobindo Pharma could soon enter. Tata Steel and Bharat Forge have
notched major export successes and may well take the next step of a
manufacturing presence in the Chinese market. It is true that we have
not tested the Chinese and no Indian company has ventured forth to invest
in Tibet or Xinjiang, two of the politically most sensitive regions
of China. It is also true that we have been slow to develop commercial
ties with Taiwan, something that might also test Chinese attitudes and
responses. Even so, on the basis of present evidence it certainly appears
that China is more relaxed about Indian investment presence in China
than we appear to be on Chinese investment in India. Even on trade it
must said that while we are less inhibited, we have acquired the dubious
distinction of being the single largest user of anti-dumping duties
in the world-a truly remarkable phenomenon in a perverse kind of way
given our laughably low share of global trade.

Of course, any bias against Chinese investments will be strenuously
denied by officials in the capital. There is, of course, no clear policy
directive or direction to this effect. They will point to the remarkable
success of South Korean companies like Hyundai and LG in India in the
past few years as proof of our open door policy, epecially to investors
from East Asia. But there is no political paranoia in India vis-�-vis
South Korea as there is in relation to China. Perceptions matter. The
reality may well be different but in all such matters optics assumes
great importance. Whatever we say, the gnawing feeling in the community
that is concerned about such matters is that India is still unable to
break out of the shibboleths of the past. When business visas to China
after proper documentation take four-five days to get here but when
business visas to India there take two-three weeks, then there is bound
to be a feeling that we are not on the same wavelength. The fact is
we are not. Just consider the media presence in each other’s countries.
There is just one Indian journalist positioned in Beijing affiliated
with the PTI while there are 12 Chinese journalists in New Delhi alone.

Against this background, the move by the Confederation of Indian Industry
(CII) to open an office in Shanghai is a welcome step forward. China
was a partner country in CII’s India International Trade Fair earlier
this year. In mid-October 2003, the first-ever Made in India show is
being organised in Beijing with the support of the two governments.
Hopefully, this show will travel to other provinces and growth centres
in China. An India Club is also being launched in Shanghai located in
the famous Shanghai Mart. This will undoubtedly be of great value to
India business looking to export to, source from or invest in China.
One of the objectives of the Club must be to address the fundamental
asymmetry in the bilateral trade relationship and enhance India’s importance
in China’s overall trade portfolio.

Over the past few days, there have been some reports emanating from
South Block that India and China are close to a “deal” over Sikkim and
some initiative in this regard may be announced during Mr. Vajpayee’s
visit to Beijing in late-June. If the Chinese were to recognise that
Sikkim is an unalienable part of India, the historic silk road that
runs between Sikkim and Tibet through the Natu La pass could well be
reopened by India with implications for tourism as well. But even without
formal recognition, a border trade agreement will be in our long-term
interest. While this must be pursued, it is important that Mr. Vajpayee’s
visit is used to allay Chinese fears that India is not favourably inclined
to an increased Chinese investment presence here. If we do not send
a positive signal forcefully and categorically, the expansion plans
of Indian companies themselves in China will be under threat. You cannot
open a green channel for trade and say that we will go slow on investment
because we don’t trust you fully. The two are inextricably linked.