India Promotes Domestic Industrial Parks for Chinese Investors

October 25, 2013 Posted by India Briefing Reading Time: 2 minutes

Oct. 25 – In light of India’s growing trade deficit with China, Indian Prime Minister Manmohan Singh not only welcomed Chinese investment into his country but also promoted the idea of creating Chinese industrial parks during a speech given to Chinese media and business representatives earlier this week.

“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,” he remarked.

His comments followed the visit of a Chinese exploratory committee this month sent to assess the potential of such a venture. The delegates were shown candidate industrial cluster sites in both Uttar Pradesh and Haryana, and a follow-up visit has been planned for several locations favored by the Chinese business representatives – including Gujarat, Maharashtra and Tamil Nadu.

Despite a focus on increased economic cooperation, bilateral trade between India and China fell 12 percent in 2012, standing at just US$66 billion. Further, India’s trade deficit that year also grew to US$29 billion.

Seeking to boost the region’s synergy, both countries helped establish the Bangladesh-China-India-Myanmar (BCIM) forum for regional cooperation, which works to identify specific sectors and projects for joint cooperation.

“We believe that the BCIM Economic Corridor can potentially reinforce our existing connectivity initiatives, and we have expressed our support in principle to the idea during Premier Li Keqiang’s visit to India,” Singh further commented during his speech.

India has already established several industrial corridors with Japanese companies, such as the Delhi-Mumbai Industrial Corridor as of late, which is 26 percent owned by Japanese entities.

Further, trade between India and Japan has benefited from this intimate cooperation, reaching US$18.4 billion during the 2011-12 fiscal year – up from US$13.7 in the previous year.

As the Chinese economy transitions from an export-driven model to one based on growing domestic consumer demand, Indian companies may be well positioned to provide the newly required supply. In the month of September alone, Chinese imports from India grew by 7.4 percent compared to a year prior.

“The whole world is trading with China and getting Chinese investments, and so should we,” said Jawaharlal Nehru University professor Alka Acharya.

“There are most certainly some security concerns holding back India’s acceptance of Chinese investment, particularly in telecoms and telecoms investment, but these can be allayed by building in requisite checks and balances in contracts,” he further commented.

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