Govt likely to ease scrutiny on Chinese investments

Wednesday 11th February 2015 05:54 EST

Ahead if Prime Minister Narendra Modi's China visit in May, India is considering easier security clearances for Chinese investments and extending visa-on-arrival facility to Chinese tourists. The home ministry has lately been discussing the option of relaxing security norms for investments from China, particularly in “sensitive” sectors like telecom, power and nuclear energy. This is apparently at the behest of the PMO as well as the foreign ministry.

As per security clearance norms relating to foreign direct investment, Chinese companies face a stricter scrutiny by the security agencies, particularly in sectors like telecom, power, nuclear energy , ports and petrochemicals. The shareholding and ownership pattern of Chinese companies are studied in minute detail by security agencies in view of concerns regarding any links with the Chinese military establishment.

Various Chinese companies have had to wait for longer periods of time as compared to firms from other countries, as Indian intelligence agencies often take time to report on their share holding/ownership. Chinese military assistance to Pakistan and help in building ports and other infrastructure in India's neighbourhood have been causes for concern for New Delhi. Such concerns had earlier held up clearance for Hutchison Ports. Last year, India had launched a visa-on-arrival facility for more than 40 countries, including the US and the UK, but left China out of the list. Chinese officials have complained to home ministry officials that the country has been put at par with Pakistan, Afghanistan and Iran.

Sources said the home ministry is studying the precautions taken by the US towards Chinese investment and the areas they have opened up. Over the next couple of months, the home ministry is expected to identify sectors and areas where Chinese firms can enter, where they can enter with certain restrictions and where they should be banned completely. As for visa-on-arrival facility, it may be offered to Chinese tourists on a reciprocal basis and provided that Beijing agrees to do away with the system of issuing stapled visa to people from Arunachal Pradesh and Jammu and Kashmir.

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