Rahul Gandhi and the Congress party have been rabble-rousing about China for a long time. As India and China started to disengage at Pangong Tso, one of the locations for the stand-off between the two countries, Rahul Gandhi took to Twitter to spread fake news yet again. On the 25th of February, Rahul Gandhi shared a media report on Twitter that relied solely on sources, to claim that after a 9 month-long freeze, India had started clearing FDI from China.
China has understood that Mr Modi buckles under their pressure.— Rahul Gandhi (@RahulGandhi) February 25, 2021
They now know they can get whatever they want from him. pic.twitter.com/BUQaLK2K5u
The report shared by Rahul Gandhi was a Times of India report written by two ‘journalists’ called Surojit Gupta and Sidharta. The report essentially came that in the backdrop of easing tensions between India and China at Pangong Tso, India had decided to start clearing FDI proposals from China that had been pending for the past 9 months since the tensions began with China.
The Times of India report shared by Rahul Gandhi alleged that the government of India has decided to start clearing FDI from China after tensions eased at Pangong Tso. The report, relying solely on ‘sources’, claimed that the government will be clearing FDI proposals on a ‘case to case basis’ and that the smaller proposals would be cleared before the larger ones are considered.
In fact, the report went as far as to say that over the last few weeks, the clearing of proposals has already started. Another report in Reuters on similar lines claimed that 45 such proposals were to be cleared by the Modi government. Reuters claimed that about 150 investment proposals from China worth more than $2 billion were stuck in the pipeline and the 45 proposals that are set to be cleared are from the manufacturing sector.
The Reuters report published by Economic Times claimed that two of the 45 proposals passed were that of the Great Wall and SAIC.
The Reuters report claimed that Great Wall and General Motors had made a proposal seeking consent for the Chinese makers to purchase the US plant in India. The value according to Reuters was upto $300 million. It quoted similar figures for SAIC alluding that a proposal for pending for millions of dollars. According to Reuters, these two proposals were passed by the government of India – which would made the FDI from China just in these two proposals well above $500 million. However, as we demonstrate further, not one fact reported by the Reuters is factually correct.
Is the Modi govt clearing FDI proposals from China? The great lie by Reuters, Times of India and Rahul Gandhi
Sources have told OpIndia that no such FDI proposal by China is being cleared by the government. Government officials said that there has been no change in their position with respect to FDI from China and the government will not be changing the rules abruptly, given the Chinese aggression in Ladakh and India’s position thereof.
Further, OpIndia was told that only 3 FDI proposals have been cleared, two out of the three proposals are from companies of Japan and one is a proposal from a non-resident Indian group.
Detailing the three proposals, OpIndia learnt that one of the three proposals passed is that of Nippon Paints that has its headquarter in Japan. The investors proposing FDI are Nippon Paint Holdings Co. Ltd, Japan (Nippon Japan) which is listed on the Tokyo Stock Exchange and Nipsea International Limited, Hong Kong. Nipsea International Limited is a 100% subsidiary of Nipsea Holdings International Limited whose ultimate beneficial owners are the Goh family (citizens of Singapore, Netherlands and Australia), and Fraser (HK) Limited, Hong Kong.
The Japanese company intends to invest in Nippon Paint (India) Private Limited engaged in the manufacture and trade of paints, varnishes, Berger Nippon Paint Automotive Coatings Private Limited engaged in the manufacture of automotive paints and Noroo Bee Automotive Coatings India Private Limited engaged in manufacture and trade of industrial paints, pigments and related products. In this transaction, no direct investment was proposed, in fact, it was a proposal for the increase or acquisition of shareholding.
The second proposal passed is that of Citizen Watches (HK) Ltd. Hong Kong which is 100% held by Citizen Watches Company Limited, Japan (a company listed on the Tokyo Stock Exchange). The company that the Japanese company proposes to invest in is Citizen Watches (India) Private Limited, Bangalore. Citizen Watches Hong Kong (owned by Japan company) currently holds 98.91% in Citizen Watches India and post the investment, this will increase to 99.38%. Other shareholders in Citizen Watches India are Doshi Time Industries Private Limited, an Indian entity (holding 0.62% after current FDI) and Tadahiro Suzuki, a Japanese national resident in India (holding 1 share). According to the proposal, The investment funds are proposed to be utilized for working capital requirements as operations of Citizen Watches India has been impacted by Covid 19. The amount of investment is proposed to be Rs 28.1 crores (2.81 crore shares proposed to be issued at Rs 10 per share face value).
The third proposal that has been passed by the government of India is that of Netplay Sports Private Limited. The foreign investors, in this case, include Allshores Capital Limited, Hong Kong, owned by 2 NRIs, Sandeep Singh and Ashwin Mehta; and Rajeev Leekha, also an NRI. The company itself is involved in sports, amusement and recreation activities. The investee company, which is Netplay Sports Private Limited (Netplay India), Hyderabad, has set up a chain of sports facilities for badminton, basketball, football and with the proposed investment fund, 4 more sports centres were proposed to be opened. The total investment, in this case, is that of Rs 1.5 crores where 4,225 Compulsorily Convertible Preference Shares (face value of Rs 10) are proposed to be issued at a premium of Rs 3,450 per CCPS.
Essentially, the entire value of the three proposals passed by the government combined is that of about Rs 30 crores. The value of the Netplay Sports Private Limited proposal is that of Rs 1.5 crores, the value of the Citizen Watches proposal is Rs 28.1 crores and the Nippon Paint proposal is about the restructuring of the company and thus, there is no specific inflow involved. For three proposals that value a total of Rs 30 crores, the media concocted a lie that 45 projects worth millions were being passed by the Modi government. Also, as is clear from the details, the proposals passed pertain to Japanese companies and no FDI proposal by China has been passed.
Therefore, it appears that Reuters and the Times of India peddled source-based news about India clearing 45 projects worth millions of dollars of FDI from China (about $500 million only by two companies) and that lie, was further peddled by Rahul Gandhi to muddy the waters and target the Modi government. However, the truth is that no China FDI has been cleared by the government. Only three proposals as detailed above have been cleared, that too from 2 Japanese companies and one NRI based company, and the total value of these proposals is a mere Rs 30 crores.