Chinese firms not to be screened

Security clearance only for sensitive industries.

It may soon become a lot easier for Chinese companies to invest in India as the government is planning to waive the condition imposed on them of obtaining a lengthy security clearance from the home ministry.

The background check on the promoters and key functionaries of Chinese companies wanting to invest in India is also likely to be cast aside.

In the case of companies from other countries, this is done only if the investment proposal pertains to sensitive sectors in which such a check is laid down by the investment norms.

As India tries to attract more investment from China, the government is considering a proposal to treat Chinese companies on a par with companies from other countries.

This will clear the air over the proposal of Huawei Telecommunications, which had sought permission to set up a manufacturing unit in India about two years ago. Its application is still hanging fire.

Similarly, the proposal by Hutchison to invest in setting up port infrastructure in India has not yet got the government's clearance.

As a part of the government strategy, the Chinese companies may even get fast-track clearances for investments in sectors in which the government allows 100 per cent foreign investment. For sectors with sectoral caps, the normal course of clearances will have to be taken. Till now, even in sectors in which foreign investment was allowed through the automatic route, Chinese companies had to wait long for approvals.

Even for consumer durables and electronics companies like Haier and TCL, it was not easy to set up shop in India. The Indian government took longer to permit them. According to government officials, this would be a thing of the past.

"Chinese companies feel that there is a lot of resistance from India towards investments in India. There is a move from us to ease the investment climate for them," said Nalin Surie, Indian Ambassador to China.

Expectedly, investments by Chinese companies in India have not been robust. There is also a yawning gap between approvals and investments.

According to government data, the actual investment by Chinese companies in India is just $0.63 million against an approved investment of $231.6 million during the year to March 2004.