| A worker ties a Chinese and Indian flag on a pole near the India Gate in New Delhi on Monday. (AFP)
New Delhi, Nov. 20: Hours before Chinese President Hu Jintao arrived in India, commerce minister Kamal Nath shut out the doubting Thomases in the Indian policy establishment on investments from China.
The minister said India would not single out Chinese companies in the proposed norms on security aspects of foreign direct investment (FDI) proposals. “Investments from China are welcome and it is a misconception that we are proposing a country-specific regulatory mechanism,” Nath said.
He said both the options, of a separate legislation or otherwise, were being considered by the national security council in preparing the norms to assess the security implications of FDI proposals.
He said the council would draw on the experiences of other countries in framing norms. “Developed countries in Europe and the US have such security rules in place and we are not doing anything different,” he said.
Nath said, “A free trade agreement with China is not on the cards, but this is something worth examining.”
China wants to hammer out such a pact quickly but India has its reservations as Indian firms dread the possibility of cheap goods from China flooding the market.
Minister of state for commerce Jairam Ramesh also gave an indication of the policy against getting tough on Chinese investments at a function organised by the CII where he advocated a “relaxed approach” towards facilitating Chinese investments, while re-iterating the security implications of FDI proposals.
He, however, said actual investments by China are lagging behind proposals, with only $3 million investments being made in India against approvals of $260 million.
In the meantime, the cabinet has approved the bilateral investment promotion and protection agreement that will be signed during Hu’s four-day visit, along with 11 other agreements, to boost trade and commerce between the countries. Bilateral trade is expected to touch $20 billion in 2006-07 against $18.7 billion in the last fiscal.
China will consider the investment pact to be a significant diplomatic achievement given the hostility against FDI from China in India.
Chinese companies have taken up projects worth $2.2 billion in India during the first half of 2006, a big jump from the over $1.8 billion of business bagged in the last calendar year.
Chinese companies do have some misgivings over not being allowed to invest in ports and telecom over security issues. However, of the 38 foreign direct investment proposals submitted by Chinese companies as many as 33 have been cleared since 2004.
National Security Council working on norms relating to FDI and security
Norms based on experience of several countries
Chinese firms not discriminated against in the norms
Free trade pact not on agenda, though China wants one
Actual China investment in India less than approvals .