Trade curbs signal decoupling from China | Latest News India - Hindustan Times
close_game
close_game

Trade curbs signal decoupling from China

Hindustan Times, New Delhi | ByRajeev Jayaswal
Jul 25, 2020 06:18 AM IST

The country also reacted to Chinese aggression in Eastern Ladakh in June in which 20 Indian soldiers and an unknown number of Chinese soldiers were killed.

India’s order on Thursday, restricting purchases for large public projects (and even those being developed as public-private partnerships) from companies in countries that share a land border with it, citing national security concerns, is aimed at China, and, according to three government officials familiar with the thinking behind the order, will also deter private firms here from dealing with Chinese companies.

India removed Chinese investments from the so-called automatic approval route fearing takeover of Indian firms at a time when the country was fighting Covid-19.(Arvind Yadav/HT Photo)
India removed Chinese investments from the so-called automatic approval route fearing takeover of Indian firms at a time when the country was fighting Covid-19.(Arvind Yadav/HT Photo)

This is a well thought-out move that will also deter all state-run banks and financial institutions from funding any public sector or private sector projects with direct or indirect connections with China, the officials added. “Thursday’s decision is certainly a retaliatory actions against Chinese aggression with wide-ranging impact. Even Indian states will stop procuring Chinese goods and services,” one of the officials said. The order is the latest in a series of moves aimed at reducing the penetration of Chinese commercial interests in India.

Hindustan Times - your fastest source for breaking news! Read now.

Also Read: India builds a huge wall to stop Chinese firms from getting govt contracts

In April, India removed Chinese investments from the so-called automatic approval route fearing takeover of Indian firms at a time when the country was fighting Covid-19.

The country also reacted to Chinese aggression in Eastern Ladakh in June in which 20 Indian soldiers and an unknown number of Chinese soldiers were killed. On June 29, the government announced ban on 59 mostly Chinese mobile applications, citing concerns that these are “prejudicial to sovereignty of India, defence of India, security of state and public order.” 

State-run BSNL was asked to keep Chinese suppliers out of its 4G upgrade project and it is likely that Chinese company Huawei, which has already been proscribed by some western nations who fear the data security of their citizens may be compromised.

Also Read: US agrees to discuss social security tax burden of Indians working in America

Thursday’s order will also bar, direct or indirect Chinese participation in strategic sectors such as power, petroleum, coal and telecom, the first official said. “In fact, some public sector companies are even contemplating taking legal opinion, how to scrap tenders already awarded to Chinese firms,” he added.

Already the work at ~13,277 crore Talcher fertiliser and coal gasification project, which was awarded to Chinese firm Wuhuan Engineering Co Ltd last year, has been halted. HT reported this on July 7.

Without directly naming China, India has also been raising its issues with the country at various forums. At the BRICS trade ministers’ meeting, commerce and industry minister Piyush Goyal called upon the members to build “trust” to prevent losing their role of pre-eminent trade partner, a message that was meant for China, the second official , who works for an economic ministry, said. “Brazil, Russia, India, China and South Africa are BRICS members and barring China, the issue of trust-deficit does not arise with any other members,” he added.

Also Read: India imposes levy on all imported measuring tapes as Chinese dumping continues via third countries

The first official said the Union government is cautious and plans to discourage states from using Chinese equipment and technology in the strategic power sector projects. It may even direct state-run financial institutions focused on the sector, Power Finance Corporation Ltd (PFC), Rural Electrification Corporation Ltd (REC) and Indian Renewable Energy Development Agency (IREDA), to withhold financing to such projects that are based on Chinese technology or equipment, he added.

Another major blow to Chinese companies would be their exclusion from implementing the government’s ambitious world’s largest smart metering project on security grounds, he added.

A third official, who works in another economic ministry said, the government is considering duty protection against Chinese imports. There is a proposal to impose a basic customs duty (BCD) on all imported solar cells, modules, inverters and their components. HT reported on May 11 that India could also extend anti-dumping duties and safeguards on at least two dozen Chinese goods amidst concerns that a flood of imports would kill domestic manufacturers .

Also Read: China holds out WTO threat over ban on 59 mobile apps. India bursts the bubble

These need to be accompanied by “hard power” messages, an expert said.

Anupam Manur, assistant professor at the think tank Takshashila Institution, said, “The banning of apps and stopping of procurement from China is merely signals of intent and posturing, but when these are not accompanied by actions and show of power, such as a counter-offensive somewhere along the border or building our maritime power in the Indian Ocean and South China Sea, these signals will lose credibility. The reality is that Beijing cannot be deterred without the use of hard power.”

Samir Kanabar, tax partner at consultancy firms EY India said, “One would have to evaluate if the Order will delay the bidding process resulting into delay of large infrastructure projects.”

Unveiling Elections 2024: The Big Picture', a fresh segment in HT's talk show 'The Interview with Kumkum Chadha', where leaders across the political spectrum discuss the upcoming general elections. Watch now!

Get Current Updates on India News, Election 2024, Arvind Kejriwal News Live, Bihar Board 10th Result 2024 Live along with Latest News and Top Headlines from India and around the world.
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Thursday, March 28, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On