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Amidst continued provocation, Uddhav Thackeray hopes for Chinese money, may have to scrap plans due to Modi govt’s strict policy

Maharashtra government has been writing to Centre to ease policy for foreign direct investment as the Rs 5,000 crore investment plan from China have been stalled after Galwan clashes.

After stalling the MoUs signed with Chinese companies following the Galwan Valley clash in June 2020, The Maharashtra Government is now keen on revisiting the status of Chinese investments in the state. When the Galwan Valley Clash broke out in June 2020, the Maharshtra Government was busy signing MoUs with three Chinese companies worth over ₹5,000 crores. However, after advice from the Central government, The state Industries Ministry had put the Chinese proposals on hold within a week after the clash in Galwan broke.

The Uddhav Thackeray led-Maharashtra Government had signed memorandums of understanding (MoUs) with three Chinese companies including Hengli ( ₹250 crores), Great Wall Motors ( ₹3,770 crores), and PMI Electro Mobility Solutions, a joint venture with Foton, ( ₹1,000 crores) in June 2020. As of now, the investment proposals remain on hold, while it has been learnt that the Maharashtra Government is keen on seeking clarity from the Centre as to whether these projects can be restarted.

While talking to the Hindustan Times, state industries minister Subhash Desai said, “The policy adopted by the state government back in 2020 over Chinese foreign direct investment (FDI) still stands because the matter is of international relations. However, we are yet to receive any communication or approval from the Centre,” Arguing that the proposals are from non-strategic sectors on which guidance was sought from the Centre, the Maharashtra government arguably sees a future with China.

For this, the Maharashtra Government has written letters to different authorities allied to the Central Government on the underlying fate of the MoUs with Chinese companies. In March 2021, additional chief secretary to industries, Baldev Singh, wrote a letter to Guruprasad Mohapatra, secretary, DPIIT. A letter was also was sent to Amitabh Kant, CEO, Niti Aayog, by P Anbalagan who is the CEO of Maharashtra Industries Development Corporation (MIDC), in September 2021. Reportedly, the issue was also discussed in the pre-budget meeting with finance minister Nirmala Sitharaman this year.

While the Central Government has not responded on the issue yet, Maharashtra Government’s intent to revive the Chinese memoranda is quite clear. On June 25, 2020, when the decision to put the investments on hold was announced, Subhash Desai had asserted, “We have decided to put the MoUs signed with the three Chinese firms worth ₹5,020 crores on hold. However, this doesn’t mean that they have been cancelled. We will be waiting for a clear policy from the Central government on this issue before taking any decision,” Desai was also open about the possibility of the projects being implemented in the state if the relations between the two countries improve.

Even before the rising anti-China sentiment in the country which broke after the Galwan Clash, The Central Government revised its FDI policy by making approval mandatory for FDI from countries sharing land borders with India, which includes China.

Chinese Investments in Maharashtra

With a move to boost jobs in the state, Maharshtra Industries Ministry signed 12 MoUs worth ₹16,300 crores with major global companies. Pacts worth over ₹5,000 crores were signed with three Chinese firms alone, with companies like Hengli, Great Wall Motors and PMI Electro Mobility Solutions. According to a senior official from the department, the MoU with Hengli is deal with the automobile sector with the company being a major auto component manufacturer. The Maharashtra Industries Development Corporation (MIDC) was ready to allot land to the Chinese company but the decision was taken back in June.

The Great Wall Motors (GWM) wanted to buy a closed General Motors (GM) plant in Talegoan while both the companies signed an agreement in January 2020. GWM is an electric vehicle and auto-manufacturing company.

Speaking on behalf of the Chinese companies, the industries minister requested in the pre-budget meeting, “Hengli is one of the biggest investors from China…However, with the implementation of the revised FDI rules requiring companies based in neighbouring countries to receive government permission before investing in Indian business, the Chinese companies such as Hengli are still awaiting the decision by the Centre.”

While the Maharashtra state government is keen on seeking guidance from the Centre on the matters pertaining to the existing Chinese investments in the state, its ambitions to review Chinese investments while working on new proposals have caught the light of the day.

Ayodhra Ram Mandir special coverage by OpIndia

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OpIndia Staff
OpIndia Staff
Staff reporter at OpIndia

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