Modi gets some Chinese investments home but can’t celebrate yet

Prime Minister Narendra Modi's tour to China to attract foreign investment yielded some results but he has a long way to go to turn India into a magnet for further investments.

During Modi’s recent China visit, GMR Infrastructure inked an agreement with Guizhou International Investment Corp (GiIC), a consortium of three Chinese manufacturing firms, which will set-up units at GMR’s SEZ in Kakinada.

This move will see $3.5 billion investments over next five years.

As per a BSE filing, GiIC signed a Memorandum of Understanding (MoU) with Kakinada SEZ (KSEZ), a subsidiary of GMR Infrastructure, to set up an industrial park for the high-end Chinese equipment manufacturing companies.

The filing added that Chinese companies dealing in power equipment, electronics, wind & solar energy and smart technologies were planning to set up their manufacturing units in Kakinada SEZ.

KSEZ is a port-based zone that is spread over around 10,500 acres. Situated on the eastern coast in an area rich in oil and natural gas deposits, the special zone has logistical linkages to national highways, railway networks, air and sea ports.

"GiIC would invest $500 million in developing the infrastructure and various facilities of the industrial park, which would house leading Chinese manufacturing industries. These Chinese companies would additionally invest $2-3 billion in setting up their operations over the next 5 years," the filing read.

Meanwhile, these companies will also be able to avail various benefits from Prime Minister's 'Make in India' campaign and Andhra Pradesh government's investment incentives in the state.

The move will also generate more than 5,000 jobs for both skilled and unskilled workers.

However, Chinese media said that Modi’s tours to attract investments from various countries would prove fruitful only if India improved its domestic environment for investors.

"Over the last 12 months, Modi has not only left his footprints in Washington, Tokyo, Ottawa, Berlin and Beijing, but also hosted heads of states from China, the US
and Russia," an article in the state-run Global Times said.

The article further read that for Modi, the biggest lesson would be on how to improve country's domestic environment for investors.

Even though Modi government brought in a series of measures to appeal investors, including establishing special economic zones, free tax zones and free trade areas, some of these efforts have come up against resistance of local governments.

"India has been experiencing anaemic growth since the economic crisis in 2008. In the meantime, the government is short of money for development. Introducing foreign investments is therefore the only way to reach its economic growth targets," it said.

After winning the biggest mandate last year in May, Modi had vowed to cut red tapism and correct India's ranking in 'ease of doing business', which slipped to 142.
Modi has been luring various business conglomerates, inviting them to ‘Make in India’ and also realise his dream of turning the country into a manufacturing hub.

(Image: PIB)