Maharashtra awaits clarity from Centre over ₹5,000 crore investments from China
For almost two years, the Maharashtra government has been waiting for a communication from the Centre over investment proposals worth over ₹5,000 crore signed with Chinese firms
For almost two years, the Maharashtra government has been waiting for a communication from the Centre over investment proposals worth over ₹5,000 crore signed with Chinese firms.
The state had on June 15, 2020, signed 12 memorandums of understanding (MoUs) worth ₹16,300 crore with major global companies. Of them, pacts worth over ₹5,000 crore were signed with three Chinese firms — Hengli ( ₹250 crore), Great Wall Motors ( ₹3,770 crore), and PMI Electro Mobility Solutions, a joint venture with Foton, ( ₹1,000 crore).
The proposals were put on hold after the Galwan Valley troop clash occurred the same year.
Subhash Desai, industries minister, said the projects will continue to remain on hold as there is no go-ahead from the Centre. “The policy adopted by the state government back in 2020 over Chinese foreign direct investment (FDI) still stands because the matter is of international relations. However, we are yet to receive any communication or approval from the Centre,” he told Hindustan Times.
In order to restrict Chinese investments in the country, the Centre had in April 2020 made its prior approval mandatory for FDI from countries sharing land borders with India.
The revised FDI policy is aimed at “curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic,” said a press release from the Department for Promotion of Industry and Internal Trade (DPIIT) on April 18, 2020.
However, the state industries department had sent two letters seeking clarity on the proposals that were approved before this decision by the Centre.
On March 18, 2021, additional chief secretary Baldev Singh, industries, wrote a letter to Guruprasad Mohapatra, secretary, DPIIT. The second letter was sent to Amitabh Kant, CEO, Niti Aayog, by P Anbalagan, CEO, Maharashtra Industries Development Corporation (MIDC), on September 15, 2021. The Centre is yet to respond to the letters, officials said.
Officials also said all the proposals are from non-strategic sectors on which guidance was sought time and again.
“MoU is just one component. In our case, the investments from Chinese firms are in the non-strategic sector. For instance, Hengli is an auto component manufacturer and the FDI was set to come in before the restrictions were imposed. Similarly, Great Wall Motors wanted to buy a General Motors (GM) plant and they are also into electric vehicle and auto manufacturing. Both are not into strategic sectors such as defence, telecommunications, and energy,” a senior official from the industries department said, requesting anonymity.
Pointing this out, the official said, clarity and guidance was sought from the Centre on how to move ahead on these investment proposals.
GM had decided to shut down its Talegaon plant in a bid to cease its operations in India. Soon after that, Great Wall Motors expressed interest in buying the plant and both the companies signed an agreement in January 2020.
As far as Hengli is concerned, the MIDC was ready to allot land as well but before issuing the order, they decided to inform the chief minister and the industries minister because by that time the Galwan Valley incident had occurred and the relations between the two countries were strained, another official said. “Both the chief minister and the industries minister directed officials to put the investment proposals on hold,” he said.
The issue was also made part of the agenda for a pre-budget meeting with Union finance minister Nirmala Sitharaman in February.
“To bolster the existing industrial ecosystem, the state has signed MoUs worth ₹1.12 lakh crore with investors across diverse sectors… Of these MoU partners, Hengli is one of the biggest investors from China. It has submitted its foreign inward remittance certificate it received on March 9, 2020. However, with the implementation of the revised FDI rules requiring companies based in neighboring countries to receive government permission before investing in Indian business, the Chinese companies such as Hengli are still awaiting the decision by the Centre. Though we comprehensively support the Central government’s decision, we request your guidance on the matter pertaining to the existing Chinese investments in India,” said a note for the pre-budget meeting for 2022-23.
Soon after the Galwan clash, Desai had on June 22, 2020, declared to put the MoUs inked with the three Chinese companies on hold. The decision was taken as there were strong anti-China sentiments as 20 Indian soldiers were killed by the Chinese.
“We have decided to put the MoUs signed with the three Chinese firms worth ₹5,020 crore on hold. However, this doesn’t mean that they have been cancelled. We will be waiting for a clear policy from the Central government on this issue before taking any decision,” Desai had said in a statement.
India shares land borders with China, Pakistan, Afghanistan, Nepal, Bhutan, Bangladesh and Myanmar. Other than China, Pakistan and Bangladesh are facing such restrictions.