Investment from Chinese firms: State to seek advice from Centre

The state government inked 12 memoranda of understanding (MoUs) on Monday, of which three were with Chinese companies, including Great Wall Motors, that would collectively bring in investment of ₹5,020 crore to Maharashtra.

In light of the tension between India and China, the Maharashtra government will seek advice from the Centre on the recently inked deals with Chinese manufacturing companies, state industries minister Subhash Desai said. He said the state would take the “country first” approach if the Centre decided to hold investment from Chinese companies.

However, senior industries department officials point out there would not be any official stand to not allow Chinese investment. (Bloomberg file photo. Representative imge)

The state government inked 12 memoranda of understanding (MoUs) on Monday, of which three were with Chinese companies, including Great Wall Motors, that would collectively bring in investment of ₹5,020 crore to Maharashtra. The Chinese automobile company, according to officials from the industries department, is expected to invest ₹3,770 crore in Talegaon, Pune. Besides, engineering firm Hengli has also signed a pact to invest ₹1,000 crore in Pune district, while PMI Electro Mobility Solutions, a joint venture with Foton China, is expected to invest ₹250 crore in Talegaon.

“If the Government of India takes any policy decision on not allowing Chinese investments, it would be applicable to us as well. Till now, there was no ban or an advisory stating that Chinese companies should not be allowed [to invest], so we went ahead [with the deals]. We will ask the Centre on how to go ahead. We will proceed as they say. The country comes first, everything else is secondary,” Desai said.

The deals were inked on June 15. It has come at a time when anti-China sentiments are high in the country in light of the stand-off between Indian and Chinese troops in eastern Ladakh that killed 20 Indian soldiers.

However, senior industries department officials point out there would not be any official stand to not allow Chinese investment. They, however, expect a delay in the launch of the projects. “Public sentiment aside, the government functions on a policy. So far, there is no advisory (against Chinese investments) and it is unlikely that there will be one. We expect the MoUs to be honoured, only it might take some time for them to actually come in, if tensions continue,” a senior official said, requesting anonymity.

“If Great Wall Motors come to the state, it would be the biggest Chinese investment in Maharashtra. The Maharashtra government has signed the MoU, but the Foreign Investment Promotion Board has to clear it for foreign investment to come in. The Central government cannot directly disallow investment due to the World Trade Organisation rules, however, it can do so indirectly through non-tariff barriers, including delaying clearances, etc,” said Ram Bhogale, former president of Chamber of Marathwada Industries and Agriculture.

Santosh Mandlecha, president of Maharashtra Chamber of Commerce, Industry and Agriculture, said, “Post Covid-19, Chinese companies are not welcome for investment in many countries, including Australia, US, etc. At a time when we are talking about ‘Atmanirbhar Bharat’, we can use the opportunity to build industries. Currently, India and China do a business of ₹7.5 lakh crore annually, which we cannot immediately shut and shift. We will require two years if we start today.”