India breaks trade barriers for China

New Delhi: The Government has decided to throw open the doors for Chinese companies to invest in India.

Its perhaps the biggest breakthrough in Sino-Indian relations as Chinese telecom equipment company Huawei Technology can now freely set up a wholly-owned Indian subsidiary without getting bogged down by the regulatory maze.

Even though India has been trying to improve its trade and business ties with China, most Chinese investments in India in telecom, ports and infrastructure face over-cautious bureaucratic scrutiny.

Even the world's leading port operator, Hutchison Port Holdings of Hong Kong can now bid aggressively for the container terminal in Mumbai port.

All their investment proposals have been cleared by the Prime Minister's Office, which personally took over these cases.

Certain sections of the Government, security agencies like Research and Analysis Wing and several corporate bodies had raised the bogey of national security the moment the investment plans became public.

But the key economic ministries and the PMO believe that it is much better to engage the ‘dragon’ rather than feel threatened by it.

In a meeting that was held last week, the telecom ministry had said "It would not be advisable to deny M/S Huawei from participating in tenders. Their participation is likely to act as a deterrent to other bidders from quoting higher rates."

This comes at a time when all telecom companies including Huawei are eyeing tenders over Rs 16,000 crore from state owned BSNL.

Earlier Huawei had decided against investing in India because of government clearances.

In case of Hutchison Port, the Finance Ministry pointed out that the company operates in 19 countries across Europe and US.

The ministry says, "If such big multinational operators are not allowed to bid for projects in major Indian ports, it will not only reduce competition but will send adverse signals to business enterprises across the world."

And while China baiters in and outside the Government could still protest the decision, for now, the Manmohan Singh Government seems to have made a major move in reaching out to the ‘dragon’.