Chinese FDI to set up SEZs likely post-2014 polls

Despite the PM making a strong pitch for Chinese FDI into India in industrial parks, this is not likely to happen in a hurry.

A Chinese delegation was in India in the past few weeks to check out possible sites for industrial parks, or special economic zones (SEZs). While they actually wanted to go to Gujarat, Maharashtra andTamil Nadu, Indian trade bureaucrats insisted they visit Uttar Pradesh and Haryana. Sources said the Chinese delegation will have to come back for several more surveys before they can zero in on appropriate sites.

Sources said that both sides are working on the groundwork for setting up Chinese “clusters” on the lines of the Japanese. Japanese companies operate out of dedicated areas like at Neemrana in Rajasthan, something that Chinese firms have indicated they would be comfortable with. However, sources in China said they would begin the process of identifying sites, but would take a call only after the general elections next year.

Besides, while Japanese companies in India don’t get the backs up of Indian industry, that’s not true with Chinese firms. Government sources said there was some opposition from Indian industry about letting Chinese companies into the country. New Delhi is desperately looking for Chinese FDI to balance the trade deficit that has ballooned to over $30 billion.

The government has taken the first steps to get Chinese power equipment companies to set up centres to provide service and spare parts in India. By the end of the 12th Five Year Plan (2012-17), Chinese power companies would have exported 60,000 MW of power equipment. But many Indian plants have complained of poor services and lack of spares which have even resulted in shutdown of plants. India and China may sign an agreement during the PM’s ongoing visit to Beijing to set up power equipment service centres in India.


In an interview to official Chinese media, PM Manmohan Singh on Tuesday welcomed setting up of Chinese industrial parks. “We are happy that more Chinese firms are looking to India as an investment destination. During his visit to India in May 2013, Premier Li Keqiang suggested that we look at the option of establishing a Chinese Industrial Park in India where companies and firms from China could cluster together. We welcome this idea,” the PM reportedly said.

“We have also shown them few possible sites for a Chinese Industrial Park. We will work with the Chinese side in implementing the idea,” the PM added.