Chinese Investments In India Increased By Six Times

BEIJING: Chinese investments in India grew six-fold in 2015 to USD 870 million from the previous year while more investments are in the pipeline following easing of restrictions on Chinese firms and favourable tax rates, a state-run daily said ahead of President Pranab Mukherjee's visit. 

Investment in India by Chinese companies in 2015 reportedly rose six-fold from 2014, partly thanks to low investment restrictions and favourable tax and land rent policies in the country, Global Times quoted Chinese business experts as saying. 

China's investment in India soared to around USD 870 million in 2015, six times that in 2014, the report said noting that the figure for 2015 was also twice the amount from April 2000 to the end of 2014. 

Indian trade officials say that the figures reflect how Chinese investments trickled in small quantities into India. 

India stepped up efforts to get Chinese investments in Make in India campaign since last year. 

Over 300 Chinese investment officials and investors are expected to take part in India-ChinaBusiness Forum to be addressed by Mukherjee in Guangzhou city tomorrow. 

The total FDI from China in India so far is about USD 1.24 billion, according to Indian official figures. 

Chinese officials say that money has been committed for a number of projects in India and the cumulative figure was expected to go up. 

During Chinese President Xi Jinping's visit to India China has committed USD 20 billion investments in India. 

India, which has liberalising the investment climate for Chinese investors by removing visa and security restrictions, is insisting for more investments from China as the bilateral trade deficit has touched over USD 48 billion in favour of China in about USD 71 billion trade last year. 

Chinese enterprises have been expanding their presence in India in recent years. One of China biggest banks, the Industrial Commercial Bank of China (ICBC), had set up a special team in its Mumbai branch in 2015 to provide its Chinese clients with consultation services for mergers and acquisitions (M&As) in India. 

The move was taken partly because of the increasing interest in M&As among Chinese enterprises operating in the country, the Global Times report said. 

China's property giant Dalian Wanda Group announced in January that it would spend USD10 billion in building an industrial park in north India. 

And in February, construction machinery manufacturer Sany Heavy Industry Co revealed a plan to invest USD One billion in India in the next decade. 

"More Chinese firms are showing their enthusiasm for investing in India due to its huge market potential, along with low costs and strong demand," Pang Guoteng, a research fellow at Shanghai-based M&A information provider Morning Whistle Group, said.
(Reopens FGN 21) 

The Indian economy is also growing rapidly. The IMF estimated in August 2015 that India will see GDP growth of 7.5 per cent in 2016. Besides, the "Make in India" campaign is helping to attract overseas investment, Pang noted. 

"The Indian government hopes overseas investment can boost India's productivity," said Pang, adding that local sectors like infrastructure and the Internet offer good investment opportunities for Chinese enterprises. 

Experts also said the policy environment in India is a big part of the reason why the country is attracting more investment from China. 

"Currently, there are no laws or regulations restricting Chinese firms from investing in India," Li Qin, a Chinese legal counsel with India-based law firm D H Law Associates said. 

"Not only that, the Indian government also provides favourable tax and land rent policies for big investments that can create a large amount of job opportunities or bring advanced technology to India," Li noted. 

For instance, in the state of Andhra Pradesh, projects that create 2,000 jobs are accorded special status and are given tailor-made benefits by the local government, according to the local industrial development policy for the 2015-20 period. 

Pang noted that Chinese enterprises still need to pay close attention to tax rules, as they vary a lot in different states in India. 

While India offers potential for Chinese firms, there are also challenges. 

"The language, culture and market environment there are very different from those in China," a representative from Chinese smartphone maker Vivo, who wished to remain anonymous said. 

Vivo opened a factory in India in late 2015, and had more than 8,000 employees there by the end of the year. 

But competition in the country is intense, the representative said.

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