Ban on China companies unlikely to hit ongoing highway contracts

The government’s crackdown on Chinese companies may not hit ongoing highway contracts as any disruption at this juncture can potentially derail these projects. The National Highways Authority of India (NHAI) will complete these contracts but will not award fresh projects to Chinese firms.

“There are 10-12 projects being executed by Chinese companies in joint ventures with Indian firms. They will be allowed to function but there will be no new contract for Chinese firms,” an official said.

As far as the contracts where the tenders have been floated, the issue will be dealt with on a case-by-case basis. “Let regional offices come to us with the tenders that have been floated; as of now, we don’t have any query from regional offices,” the official quoted above added.

Union Highway Minister Nitin Gadkari had recently said no Chinese company would be allowed to participate in future highway contracts. 

“We will not give permission to joint ventures that have Chinese partners for road construction. We have taken a firm stand that if they (Chinese companies) come via joint venture in our country, we will not allow it,” he had said.

The minister’s assertions assume significance against the backdrop of border standoff between India and China in Ladakh.

In the highway construction sector, Chinese firms are not present in a very large number but have presence with Indian partners for executing engineering-procurement-construction (EPC) and hybrid annuity contracts.   

 

MEP Infrastructure 

Developers, in a joint venture with Long Jian Road & Bridge Company, has three HAM projects involving an investment of Rs 3,000 crore. 

Experts, however, feel the impact would not be as much on the highway sector as Chinese presence in the infrastructure space in India is much lesser as opposed to the neighbouring countries of Sri Lanka and Pakistan.

“Chinese have not been very active in India’s infrastructure sector and have mostly partnered with the domestic companies to bag big-ticket projects. So there will be an impact but no to the extent it would cause in other sectors like telecom and power,” said Shubham Jain, senior vice-president and group head, ICRA.

The absence of Chinese firms in the highways sector is mainly due to their reliance on Chinese labour and India does not allow that. 

“The Chinese company ban is not very relevant to road building as their presence is not enough to make an impact,” Vijay Chhibber, former road secretary said.