Security fears nix more Chinese FDI
The Foreign Investment Promotion Board (FIPB) has nixed the plans of two Chinese nationals to set up a company in India for providing engineering and consultancy services to power sector firms.
By Gaurav Malani, TNN |
NEW DELHI: The paranoia over foreign direct investment (FDI) from China has scalped one more victim. Close on the heels of detailed suggestions from the National Security Council (NSC) on the need to scrutinise FDI more carefully from national security perspective, the Foreign Investment Promotion Board (FIPB) has nixed the plans of two Chinese nationals to set up a company in India for providing engineering and consultancy services to power sector firms. The rejection was based on ‘adverse comments’ from the ministries of home and external affairs.
The two Chinese nationals — Wang Lujun and Zhang Hongson — were keen to set up a subsidiary here for undertaking engineering, procurement and erection (EPC) contracts for power plants and infrastructure projects. Their company, Sepco Power Projects India, would also provide consultancy services, drawings, supply equipment and after-sales support, they had informed the FIPB. While the investment proposed was just around Rs1.5 crore, the rejection is significant since it would set the tone for blocking all Chinese investment in this segment.
While the external affairs ministry conveyed its reservations to the proposal, the home ministry was categorical that the FIPB should reject it. The board had initially deferred the proposal but scrapped it after recent deliberations. The move is significant since it comes close on the heels of the NSC’s suggestions on tight screening for FDI from various sources, including China, Hong Kong, Macau, Pakistan and Taiwan.
In the case of power projects coming up in Himachal Pradesh, the government was of the view that Chinese companies could not be made equipment suppliers since these units are to be located in sensitive border areas. The two Chinese nationals had approached the FIPB since they also wanted to take up wholesale trading and test marketing. All the other areas of business shortlisted by them were on the automatic route for FDI.
The two Chinese nationals — Wang Lujun and Zhang Hongson — were keen to set up a subsidiary here for undertaking engineering, procurement and erection (EPC) contracts for power plants and infrastructure projects. Their company, Sepco Power Projects India, would also provide consultancy services, drawings, supply equipment and after-sales support, they had informed the FIPB. While the investment proposed was just around Rs1.5 crore, the rejection is significant since it would set the tone for blocking all Chinese investment in this segment.
While the external affairs ministry conveyed its reservations to the proposal, the home ministry was categorical that the FIPB should reject it. The board had initially deferred the proposal but scrapped it after recent deliberations. The move is significant since it comes close on the heels of the NSC’s suggestions on tight screening for FDI from various sources, including China, Hong Kong, Macau, Pakistan and Taiwan.
In the case of power projects coming up in Himachal Pradesh, the government was of the view that Chinese companies could not be made equipment suppliers since these units are to be located in sensitive border areas. The two Chinese nationals had approached the FIPB since they also wanted to take up wholesale trading and test marketing. All the other areas of business shortlisted by them were on the automatic route for FDI.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
