NEW DELHI: China wants to fund a big chunk of India's infrastructure development .Chinese has been making a concerted bid that envisages its companies and workers getting deeply involved in upgrading India's decrepit rail, road and power infrastructure besides telecom.
A Chinese working group submitted a five-year trade and economic planning cooperation plan to the Indian government in the first week of February, offering to finance as much as 30 per cent of the $1trillion targeted investment in infrastructure during the 12th Five-Year Plan (2012-17) to the tune of about $300 billion.
That's the biggest such offer by any one country, exceeding the funds contributed by Japan, which has traditionally financed some of India's most ambitious projects. The commerce department is likely to hold an inter-ministerial meeting next week to discuss the investment proposal by China to identify sectors of India's interest, a government official familiar with developments told ET.
China has more than $3.8 trillion in reserves — which keeps rising thanks to trade surpluses with other countries — that it needs to deploy effectively. And, having already invested huge sums in its own infrastructure, Beijing has been looking further afield.
It has been deploying funds in developing nations across the globe, including Pakistan, Sri Lanka, Nepal and Africa, gaining influence for itself and business for its companies. India's massive infrastructure requirement offers several opportunities to China.
The economic road map presented to the Indian government has identified key sectors such as railways, roads, telecom, and nuclear and solar power among others for investment.
"China has expressed a strong desire to invest in India's infrastructure sector," the official said. "However, it needs to be assessed how to leverage that. We need to identify sectors from where we can gain, such as software or IT, pharma, among others."
A Chinese interest is particularly high in railways, in particular electrification, high-speed trains, wagons, last-mile connectivity and gauge conversion. It has also identified sewage treatment and tunnel building as areas where it can offer substantial expertise.
India however is not keen on allowing Chinese investment in sensitive areas like the northeast and Jammu & Kashmir. The two countries share a turbulent past, having gone to war with each other in 1962 leaving unresolved border issues that flare up occasionally.
As the two most populous countries in the world, they also compete for resources globally, with the Chinese more successful at adding to their reserves.
The home and defence ministries are wary of Chinse investment for strategic and security reasons, the latest example being 100 per cent FDI in railways that the government aims to allow.
Regarding this, the home ministry has already flagged security concerns over Chinese companies investing in sensitive areas such as the northeast and Jammu and Kashmir.
"The Chinese have offered to make big investments in India," a Planning Commission official said. "Since there are nine ministries that have been engaging with China at different levels, the department of commerce wants to strike a common strategy."
International Business Times
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