Border face-off: UP govt treads cautiously on Chinese investment
Although Chinese companies are making investment in accordance with policies of the union government and provisions of Uttar Pradesh Electronics Manufacturing Policy-2017, the authorities are treading cautiously in view of the tension on the border that may even have an impact on the process of investment by Chinese companies in the state.Updated: Jul 09, 2020 07:39 IST
The faceoff between India and China on the border, followed by a ban on Chinese apps, has put the state government in a dilemma over the large investment that Chinese companies are making, or have already made, in the electronics manufacturing sector in Uttar Pradesh.
Although Chinese companies are making investment in accordance with policies of the union government and provisions of Uttar Pradesh Electronics Manufacturing Policy-2017, the authorities are treading cautiously in view of the tension on the border that may even have an impact on the process of investment by Chinese companies in the state.
“We are treading cautiously. A large investment of about Rs 15,000 crore to Rs 20,000 crore is being made by the Chinese companies that are setting up their units in electronics manufacturing sector in the state. Many of these companies are already here and have made make-shift arrangements to start their production. Large incentives have been promised to them. We are now adopting a wait and watch policy before pushing ahead the process of investment that includes giving them a letter of comfort,” said a senior functionary dealing with foreign investment in electronics manufacturing sector in the state.
“Major Chinese companies in the process of making investment in the state include Haier Appliances (Rs 2,800 crore), Holitech Technologies (Rs 1,700 crore), Sunwoda Electronics (Rs 1,500 crore) and Vivo (Rs 7,000 crore). We have not yet issued them letter of comfort,” said a senior officer of the state government on condition of anonymity.
“After the tension of the border everything has slowed down. We will expedite the processes once the border tension is over,” said the functionary, adding, “Another Chinese company Oppo has already made an investment of Rs 2,000 crore and proposes to make an additional investment of Rs 1,500 crore in the state. There is a long list of Chinese companies that have started production or are in the process of making small investments.”
Minister for industry Satish Mahana said many Chinese companies have already started production in Uttar Pradesh and the state government would act only in accordance with guidelines from the union government on the issue.
“Various incentives are promised to companies that propose to make investment in the state under the provisions of Uttar Pradesh Electronics Manufacturing Policy-2017. Chinese companies are obviously here to take advantage of the policy and have been given subsidised land to set their units in accordance with the policy,” said the functionary, adding, “UP’s development authorities, including Greater Noida Industrial Development Authority, Yamuna Expressway Industrial Development Authority and Noida have given 25 per cent rebate while providing the land to foreign companies. These include the Chinese companies. The state government is committed to reimburse to the development authorities a subsidy of about Rs 200 crore given to foreign companies.”
Other incentives to be given to companies making investment as per the provisions of electronics manufacturing policy include 100 per cent exemption on stamp duty, capital subsidy on fixed capital, 5 per cent per annum subsidy on interest for seven years, 100 per cent reimbursement of actual filing costs on awarded patents, 100 per cent state GST reimbursement for 10 years. Special incentives on case to case basis are also promised to companies making investment of more than Rs 200 crore with approval by the empowered committee and the state cabinet.
Meanwhile, professor SK Dwivedi, former head of department political science, Lucknow University, said: “There is definitely a need for caution. We need to keep a watch on Chinese investment and taken action on economic front, too, besides countering China politically. The union government should take whatever action is required to safeguard India’s interest.”