Chinese firms power onto Indian roads

Over the past few months, significant infrastructure contracts have gone to Chinese firms, suggesting a reversal of the discreet official deterrence that was imposed on investments from that country two years ago.

This development comes ahead of Prime Minister Atal Bihari Vajpayee's visit to China starting June 22, when the issue is to be discussed.

According to the Indian embassy in Beijing, Shandong Electric Power Construction Corporation bagged the enterprise procurement construction and three-year post-operative maintenance contract for the 4x135 Mw captive power project for the Sterlite-owned aluminium producer, Balco, at Korba, Chhattisgarh.

The bidding price for the project, which Balco signed in April, is $230 million (RMB 1.92 billion). Earlier, the company had successfully completed a similar project with Balco subsidiary Malco.

Chinese companies are also involved in the Golden Quadrilateral and the East-West corridor projects run by the National Highways Authority of India.

Recently, nine more Chinese companies pre-qualified as civil contractors for four-laning on the East-West Corridor project with costs ranging from $45 million to $80 million.

They join China Coal Construction Group Corporation, which was awarded the contract for four-laning and strengthening part of the two-lane national highway in Uttar Pradesh in 2002.

The current contracts come in the wake of controversies involving Chinese attempts at investment in India and India's decision to have what senior government officials call a 'double filtration treatment.'

This means that in sectors the government considers 'vulnerable,' the Indian partners of prospective Chinese investors will be discreetly dissuaded from signing up. This applies to specific sectors -- like software -- as well as regions in which the government doesn't want Chinese investment -- like Himachal Pradesh, which is too close to the border.

In areas that fall in the automatic clearance category, too, caveats will be applied. Two years ago, the dredging of the Mumbai docks by a Chinese company was halted because it was considered too close to Navy installations.

Around the same time, a Chinese team was refused permission to study National Thermal Power Corporation-run power plants to understand how they had managed to attain such a high load factor.

The government says the filtration system will continue.