Unspecified "security concerns" are cited as the main reason. The Communist Party of India-Marxist is critical of the decision. Chinese sources express concern.

New Delhi (AsiaNews) – A shadow is being cast over Sino-Indian relations after India's decision to block Chinese firms from investing in the country's telecommunications and port sectors.  In August the central government refused to approve a contract to build the Vizhinjam Deep Water International Transhipment Terminal near Thiruvananthapuram that was awarded to a consortium consisting of two Chinese companies—Kaidi Electric Power Company and China Harbour Engineering Company—and Zoom Developers of Mumbai.

Last Wednesday some political parties criticised the decisions. The Communist Party of India-Marxist (CPI-M), whose support is crucial for a parliamentary majority, wants the government to explain how Chinese investment in infrastructure projects posed a threat to India's security. CPI-M leader Prakash Karat said the decisions to keep Chinese companies out of the port projects were not in line with the present government's foreign policy that seeks closer ties with Beijing.

On Tuesday and Wednesday of last week, the issue figured in the two-day meeting of the India-China Eminent Persons Group with the Chinese side registering its concern over the blacklisting of China-based firms.

The latest action follows last month's decision by the central government to bar Hong Kong-based Hutchison Port Holdings from participating in a project to build a container port in Mumbai, because it was not given a "security clearance".

Hutchison runs 27 international port operations, in addition to 14 in China and Hong Kong and was going into a partnership with an Indian firm. The Shipping Ministry said that the company had failed to provide adequate guarantees.

India is in the midst of an ambitious port construction and modernisation programme and Chinese firms fear being shut out of a sector. Highly placed Chinese sources acknowledged that India has opened up its port and telecommunications sectors. "But if a sector is open, it is not fair to block firms from one country."

India has minimised the issue saying that only a few cases were involved, but the Chinese are concerned that selectively barring Chinese firms "has a psychological impact". They point out that cumulative Indian investment in China is around US$ 200 million, while Chinese investments in India were only one-tenth that figure.

Citing the example of Huawei Technology, a Shenzhen-based telecommunications company with more than 800 employees in Bangalore, Chinese sources said the company was denied clearance to invest US$ 60 million in a proposed new manufacturing unit in India.

Another dampener is India's reluctance to grant Chinese business people multiple-entry visas or visas allowing stays of longer than one or three months.

"Last year, 350,000 Indians visited China compared with 50,000 Chinese visitors to India. Of course, we should promote more information about India in China so as to encourage visitors but there are also big difficulties on the visa front," the source said.

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