After the visit of Hu Jintao to India and signing of several agreements, the scope for each country investing in the other has increased.
Already several Indian companies have tested/tasted the water in China. Unlike the western countries which have had to face many difficulties, it is hoped that China will be more welcome to Indian Companies/investors and make things easier for them. After all, the Chinese have been practising economic liberalisation for the last few decades and must have learnt that liberalisation has to be really that with full freedom and not shackled by the chains of red-tape and protectionism.
I am waiting to see how the Indian Government and Companies will react when they hear about the plans of Chinese Companies to invest in India like the Shanghai Electric's plan to invest $ 1 billion in a plant to manufacture equipment for domestic power plants. Now that is going to be a direct competition to BHEL which is dominant in that field and which has Public and Private ownership and has been a stock market star for the last 2 years. Will it be affected by this competition or will it take this as an opportunity to introduce better technology and service and compete on efficiency and price?
What about other manufacturing sectors? Will they be able to stand the Chinese entry?And how far the Indian Government will embrace these investments or will it ever think of making an about-face when Indian Companies petition it to protect their turf.
It will be a tragedy if they do so, because India has proved that it can operate on level playing field with Western Multi-nationals and has nothing to be afraid of Chinese investments in production facilities. In fact, it will boost the manufacturing sector in India and may bring it to the level of success the IT industry has enjoyed. The beneficial effects on increasing employment and spreading the wealth to other sections of population (the semi-literte and illiterate workers) should far outweigh the loss of income/profit to Indian Companies.
Another interesting aspect is will International investors from other countries create joint ventures with Chinese companies to invest in India?
The Elephant and the Dragon have started feeling each other out.
I fervently hope it will be a Friendship of the Giants to show the world what co-operation can do to lift everyone up the ladder and not end up as a Clash of Giants, hurting everyone.
The Chinese are coming hopefully with their blessing and friendship and as one of their favourite saying goes 'May everyone live in intersting times'.
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