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New Delhi/Hong KongCNN Business
—
Authorities in India are hitting pause on more than $600 million in deals with Chinese companies in the wake of a deadly border clash with China.
Officials in the western Indian state of Maharashtra said Monday that they were reviewing agreements with three Chinese companies as they seek clarity from the Indian government on how — or whether — to proceed.
The preliminary agreements were announced last week as part of a local government initiative to help revive the Indian economy from the coronavirus pandemic. Growth in India was slowing long before the crisis, and GDP is projected to shrink this year for the first time since 1979.
Twenty Indian troops died in the border skirmish last week, sending China and India into a tense diplomatic and military standoff. The economic stakes are high. India imports more goods from China than any other country. And India and China have enabled each other’s rise as technology powerhouses. Chinese tech giants have invested billions of dollars into India’s biggest startups, while its smartphone makers dominate the market there.
The largest business deal at risk in Maharashtra is with Chinese automaker Great Wall Motors, which had agreed to a partnership worth nearly $500 million, according to Indian authorities.
The other deals involve Chinese industrial manufacturer Hengli Engineering and Beijing-based automaker Foton Motor, which already has a joint venture with Indian electric bus company PMI.
Officials did not disclose which other Indian companies would potentially be affected. Many local firms unveiled deals in Maharashtra last week including Varun Beverages, a supplier of Pepsi products in India, and Hiranandani Group, a prominent real estate developer.
Tensions continue to run high a week after the violent exchange. There has been a change in the Indian Army’s mindset after the fatal border clashes, according to an Indian Armed Forces source. Indian troops on the border have now been instructed to meet any aggression and transgression with equal force, the source told CNN.
On Monday, Subhash Desai, industry minister for the state of Maharashtra said in a tweet from the state government’s media account that his officials were waiting for India’s central government to assess the current business climate and announce a clear policy about how to move forward on deals with Chinese companies.
— Sherisse Pham, Rishi Iyengar and Vedika Sud contributed to this report.
