Indo-China trade worsening for three years - FDI inflow/outflow fell rapidly

by Harish Gupta, National Editor, Lokmat Group

New Delhi, Sep 19

Indo-China relations may have soured after the Ladakh stand-off. But the FDI inflow from Chinese companies has been falling at a rapid pace to India for the past three years. Even Indian companies have been keeping away from China. 

This was revealed in the FDI inflow figures saying if $350 million was invested in India by the Chinese companies in 2017-18, it came down to $229 million next year and further fell to a record low of $ 163.77 during 2019-20.

It is not as if only FDI inflow has been falling regularly. The Indian companies have been investing less and less in China for the past three-four years. If Indian companies invested $49.19 million in 2017, it came down to just $12.61 million next year and rising slightly to $27.57 million during 2019. 

When the Minister asked in the Lok Sabha if the Government has any proposal to not accord any permission to any Chinese firms to invest in India, he emphatically denied “No.”

Piyush Goyal, Minister for Commerce, Industry and Railways informed the Parliament separately that India’s trade deficit with China came down to $5.8 billion in the April-June 2020-21 period from $13.1 billion in the same period of the last financial year. Even the total trade between the two nations also slipped to $16.55 billion in Q1 FY21 from $21.42 billion in the April-June period of 2019-20.

Interestingly, when asked if trade barriers have been imposed against China to ward off trade deficit, Goyal said at present, about 550 products) are under the restricted/prohibited category for imports under the Foreign Trade Policy not only from China but from all countries. Obviously, the ban was not China specific.

Fly on the Wall :Rajnath's wings clipped further

by Harish Gupta, National Editor, Lokmat Group

Rajnath's wings clipped further

The Modi government buried the rule which mandated that all applications of Foreign Direct Investment (FDI) involving investments from “Countries of Concern” will no more be routed through the Union Home Ministry. Until now all proposals received from foreign investors and countries are to be referred to the Union Home Ministry for “security clearance.” Then there was a list of “Countries of Concern” which obviously means non-friendly or suspicious destinations. This was required as per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time. The Home Ministry alone was to process these investment clearances even if they fall under the automatic route sectors/activities. The cases pertaining to government approval route sectors/activities requiring security clearance are to be processed by the respective Administrative Ministries/Departments, as the case may be. But over-night, the rules of the game were changed. It has now been decided that all investments in automatic route sectors, requiring approval only on the matter of investment including from the “Countries of Concern” will be processed by Department of Industrial Policy & Promotion (DIPP) under the Ministry of Commerce headed by Suresh Prabhu. No clearance of any other ministry is needed. But there is more in store; it was decided that even cases under the government approval route, also requiring security clearance with respect to “Countries  of Concern” will continue to be processed by concerned Administrative Department/Ministry. It means the administrative ministry will decide as it deem fit. In a way, Union Home Minister Rajnath Singh wings have further been clipped. It is explained by the PMO is that changes have been brought in to accelerate FDI investment in the country and smoothen “Ease of Doing Business”. Files remain pending for months for FDI clearances and this has now been dispensed with. It is for the administrative ministry to take a decision. 

Sending signal through Republic Day Tableau

The stamp of Prime Minister Modi is all over wherever he is and no one can miss his imprint on Republic Day parade when heads of 10 Asean countries lined up at Rajpath. If sources are to be believed, Defence Minister Nirmala Sitharaman spent hours and hours together along with officials of the PMO and at times with Modi to fine-tune the concept, planning and focus of the entire 90-minute drill. But what went without much notice was the presence of the Indo-Tibetan Border Police (ITBP)'s tableau that rolled down the Rajpath after 20 years. The ITBP tableau show-casing troops patrolling the China border on their newly-inducted snow scooters surprised defence & political observers as to why Modi chose it. The ITBP's tableau was the only one among the multiple paramilitary and border guarding forces that was cleared by the Prime Minister's Office in the parade.  Armed troops riding newly acquired snow scooters troops patrolling on foot and snow bunkers deployed in the icy heights of the frontier were showcased on the float. The last time ITBP tableau featured in the parade was in 1998 when H D Deve Gowda was the Prime Minister. The ITBP, that has been deployed from Karakarom Pass in Jammu and Kashmir to Jechap La in Arunachal Pradesh, guards the Himalayan borders across five states of the nation at treacherous terrains and altitudes ranging from 3K to 19K feet. Was it a message to China ? 

When Modi rejected JAM Tableau proposal 

It surprised many that no tableau depicted Modi's pet projects; Jan Dhan, Aadhaar, Mudra (JAM). It transpires that a proposal was discussed at the level of the PM and the idea was dropped for two reasons; one being that aspirations of the ASEAN countries was to be met within the given 90-minute format ed as many from the ASEAN were planned and Aadhaar was subjuciced. Its Tableau could have invited some controversy in the audience which would not have sent the right signals. 

After Misa, its Rabri in Rajya Sabha now 

An interesting scenario is developing in Bihar where Rajya Sabha polls for six seats are due to be held soon. In the 243-member Assembly, the RJD will win two seats at the back of its 80 MLAs. It is now clearly emerging that jailed RJD leader Lalu Yadav will send his wife Rabri Devi to the Rajya Sabha who will join her daughter Misa in the Upper House. The Congress (27), CPI-ML (3)  and a couple of Independents can help Congress win one seat if the party is able to garner majority of second preference votes. The Janata Dal (U) of Nitish Kumar has 71 MLAs while the BJP has 53 MLAs who can together win three seats. After lending 7 votes to the JD (U) for two seats, the BJP will still have six surplus votes. With the help of LJP (2), RLSP (2), HAM (1) and Independents (2), the BJP is trying to boil the pot for the fourth seat. Though the seat doesn't exist. But BJP chief Amit Shah may try to do a repeat of Gujrat as the party thinks it has many surplus votes while the Congress is short of 10 clear votes. Sources say that Amit Shah is wooing Congress rebel Dalit leader Ashok Chaudhary to become a candidate and break congress legislative party (CLP). 

Modi proposes, Ministers dispose

PM Modi has been impressing upon the Mps to focus on parliamentary work during the session and contribute in the best possisble way in their constituencies during the intervening period. But on the very first day of Parliament on January 29, the most embarrassing moment came when Vice President M Venkaiah Naidu kept sitting in his chamber along with leaders of various parties. But there was no one to represent the government. It was the crucial meeting of the Business Advisory Committee (BAC) where agenda for the session is fixed by parties through consensus. But there was none present from the government side. Neither Parliamentary Affairs Minister Ananth Kumar nor Minister of State Vijay Goel or even the Chief whip of the BJP in Rajya Sabha came. Venkaiah Naidu  and other leaders kept cooling their heels  and the meeting ended virtually in fiasco. Naidu was obviously furious. So much for Modi's sermons !