Chinese firms eye big potential in India

Although Chinese investors have complained about their sometimes frustrating experiences in India, they hope for a bright future for their investments in one of the fastest-growing markets with huge potential.

Standing next to a giant drilling machine 40 feet underground in downtown New Delhi, Lu Yuanqiang is dripping with perspiration, frustrated that his state-of-the-art machine can't drill one inch further though everything is ready.

Lu is in charge of the Indian business of Chinese constructor Shanghai Urban Construction Group Corp, which won a contract to build part of the tunnel for a new 9.37-km subway in downtown New Delhi.

As the main builder of Shanghai's 439-km subway network, consisting of 12 lines and 288 stations, and also as one of the main contractors for subway tunnels in Singapore, SUCG is "perfectly capable" of handling the work in New Delhi, but the project has been halted for three months over issues other than technology and capability, Lu said.

The problem is a railway line that crosses the tunnel above ground. SUCG needs approval from Indian railway authorities to drill under the railway line because of concern that tunneling might sink the railways.

The company has waited three months and still has no idea if it will get approval to do the work. The railway authorities have withheld approval although the subway line is a government project and the tunneling poses "absolutely no risk" to the railway, Lu said.

Millions will be lost if the construction fails to be finished on time, but there is little that SUCG can do. Why Indian railway authorities refuse to give their approval is a mystery to SUCG.

SUCG started in India in 2007, providing technology support to local constructors. Three years later, it started doing projects itself and built part of the Indira Gandhi International Airport express line. SUCG's work in the express line was highly regarded by the local government, and it later got three more projects, one of them being the 9.37-km subway.

The problem that plagues Lu the most is the issue of visas. He said it is "extremely difficult" for SUCG's Chinese employees to get work visas in India.

The whole process can take up to two years and the chances of rejection are good. In 2009, SUCG's Indian business almost collapsed after Indian immigration authorities started a campaign and sent home many Chinese employees who worked in India on business visas. At the time, SUCG's Chinese engineers had to sit in an office in China and direct constructions in India through video conferences.

Lu said the uncertainties over visas prevent SUCG from forming any long-term development plans in India because nobody knows if they will get sent home out of the blue. Even today, some of the company's Chinese employees are still on business visas.

"We are contributing to the Indian economy. I don't know why they treat us like this," Lu said.

In fact, the reason that SUCG managed to get contracts at all in India is that the company partnered with Larson & Toubro Ltd, India's largest engineering and construction company. Larson & Toubro has close ties with the Indian government and helped SUCG deal with many daunting government procedures.

The Indian government doesn't treat all foreign companies like this. In fact, Chinese companies are subject to "special provisions" because China is listed alongside Afghanistan, Pakistan and Bangladesh as nations unfriendly to India. That means most of the government procedures take longer, making business harder for Chinese companies.

For a Japanese company, for example, company registration is automatic and never takes more than a few months.

Despite lingering border disputes between China and India, their economic and trade ties have been improving. Bilateral trade was $66 billion in 2012 and is expected to reach $100 billion by 2015.