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Chinese manufacturers using FDI route in India to go through fresh security check: Finance Ministry

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Indian Ministry of Finance on Friday said that Chinese manufacturers who have set up manufacturing facilities in India using foreign direct investment route, will need a fresh security check for the future contracts in India.

According to the Ministry, future contracts with the government will be given only after companies will go through the fresh security check.

As per the Ministry’s revised guidelines, the new check requires bidders from any country sharing a land border with India to register with a “competent authority” to be eligible for government contracts.

The countries that India has exempted include Nepal, Bhutan and Bangladesh, a Delhi based newspaper Times of India reported.

The report said that the registration process for the fresh contacts will be made through a committee comprising officials from India’s ministries of home and external affairs, as well as the department for the promotion of industry and internal trade.

As there are no firms operating from Pakistan in India, the order seems to be majorly targeting companies belonging to China.

The report added that China’s smartphone brands, such as Xiaomi and Oppo will need to go through a fresh clearance as a part of getting registered under the new order.

In April, India had put a stop to automatic FDI approvals for Chinese firms and those from countries that share a border with India. Estimates suggest the government’s public procurement spend varies between 20% and 30% of GDP, with certain agencies spending nearly half their budget on this.

In June 2020, the GoI decided to ban 59 mobile applications linked to China on grounds of national security. A formal order, asking phone companies to block the applications, was also issued after weeks of discussions that started much before the Ladakh border standoff with China.

However, in response to India’s app ban move, the Chinese embassy said that India’s move was “discriminatory” and “runs against fair and transparent practices.”

In India, the anti-China sentiment has been simmering in India since June 15 border clash with china’s People’s Liberation Army (PLA) in Ladakh.

 

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