India sets up committee to study Chinese interest in power grid

India’s ministry of power has set up a committee to examine concerns around the participation of Chinese companies in the country’s fast-growing transmission sector.

Since large Chinese firms typically have close ties to the Chinese government, concerns have been raised by both Indian companies as well as some security experts about letting them manage large inter-state power transmission networks in the country. China is seen as a country with which India could eventually go to war with.

Two Chinese companies — China Southern Power Grid International and CLP (originally China Light & Power) have bid for large power transmission projects in India so far.

CLP bid for four projects in financial year 2015, but failed to win any of them.

At present, it has submitted bids for another three projects, including the ‘Eastern Region Strengthening Scheme’ project, in consortium with China Southern Power Grid International or CGSI.

Under India’s foreign investment laws, any foreign company can own 100% of any company engaged in power transmission business in India.

While this has never been seen as a problem so far, the reported aggressive bidding by the consortium has raised the hackles of both the government and the industry, leading to the setting up of the committee.

The organizations that have complained about the participation of these companies include trade bodies and manufacturers associations.