Banned Chinese Companies: India got US Support on its decision to cut off China’s economic muscle!

In a significant development, India received the first consequential international backing to its decision from the US to forbid the use of 59 Chinese applications. 

On June 15, the border tension between India and China intensified when 20 Indian military personnel were martyred after a violent conflict with the Chinese troops on the line of actual control (LAC) in the Galwan Valley of eastern Ladakh. As India-China military standoff is set to complete its three weeks, voices of support seem to be increasing in favor of GOI.

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The US Secretary of State, Mike Pompeo, has backed India’s steps against China, stating that India’s “ban Chinese applications” approach will strengthen its national security, unity, and sovereignty. He said the United States has also followed the Indian’s path and has taken significant actions against some Chinese companies.

The US Federal Communications Commission (FCC) banned Chinese telecommunications traders Huawei Technologies and ZTE and all its parent, affiliated, and ancillary companies as these companies pose a risk to national security and foreign policy interests. 

After prohibiting the use of 59 Chinese applications, India made two further decisions on Wednesday (July 1) that could cause economic damage to China. 

  • The first decision is that India will no longer allow Chinese companies to participate in its highway projects.
  •  Another decision is the Ministry of Communications has annulled the 4G upgrade tender of the state-run telecommunication company BSNL. 
  • The new tender will be issued within the next two weeks, and it will prohibit Chinese companies that produce equipment for network up-gradation.

 Nitin Gadkari, Minister of Union Road Transport, elucidates that India will not allow Chinese companies to engage in highway projects. Additionally, if a Chinese company has a joint venture with an Indian company and wants to get a road construction contract, then India will not permit this.

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The Ministry of Road Transport will soon formulate a new policy, including laws prohibiting Chinese companies and relaxing regulations on domestic companies, which will provide more opportunities for domestic companies in large projects.

India will now ensure that Chinese companies have no opportunities in their infrastructure projects. Foreign investment will be welcomed, but doors for the Chinese investment will be closed. 

It is noting that Chinese companies are very interested in infrastructure projects in India. By 2020, China plans to invest approximately Rs 1.5 lakh crore in road or rail infrastructure. Many large Chinese companies in the infrastructure sector have always viewed India as a big market.

If China does not mend its ways, it will get a positive response from all parties, whether at the border or in trade. China has been troubled by the ban on certain applications, one can only imagine what will happen to China now when India makes difficult decisions one after another on the matter of trade.

India also made it clear that to improve the capacity of the country’s small industries, it will seek technical and research support from investors in other countries, but it will keep Chinese investors away from this area. 

 India has responded economically to what China has done on the border. A decision has been made to snatch the business of Chinese companies in the field of railways and telecommunications. Therefore, state telecommunications companies have been notified not to purchase equipment from Chinese companies to upgrade their networks, while private telecommunications companies have requested to reduce their dependence on Chinese companies.

Several large Chinese companies have reconsidered the contracts of signaling systems and underground corridors in several railway projects and have indicated signs of cancelation. For example- China’s Shanghai Tunnel Engineering Company had got a contract of approximately Rs 150 crore for the construction of the underground part of the express railway project between Delhi and Meerut.

Besides this, the government has set new rules for its electronic market (ie GEM). In this rule, the seller must inform the country of origin of the goods to sell them in the electronic marketplace. The outcome of this decision will discourage people who previously imported goods from China and sold them on the government’s electronic market GEM, which will promote manufacturing in India.

When Chinese companies carried out their economic intrusions around the world and increased their stakes in companies that were weakened during the coronavirus pandemic, India also changed its FDI rules.

 Any company or individual of countries that have borders with India must obtain government approval before investing in any sector of India. This decision also troubled China at the time.

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 India’s ban on the use of 59 Chinese applications in India is another major reason why China is upset. China envisions itself as a global technological power, but this small step of India has destroyed China’s dream.

Even on Wednesday, Indian Prime Minister Narendra Modi removed his account from China’s social media platform Weibo, sending a strong message to China on border issues, the economic front, and the “personal level” too. 

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