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West Bengal Means Business: Should Mamata Vie For Chinese Investment? – Analysis

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The volta face of Chief Minister of West Bengal Mamata Banerjee, exhibited by her hell-bent to woo big investors, in contrary to her drubbing Tata’s Nano project in 2008, raised eyebrows among business honchos. Following the success of Vibrant Gujarat, she organized series of Bengal Global Business Summit.

The first three summits were eclipsed by investors’ oscillation between hopes and suspicion. The fourth summit witnessed some green shoot . Big houses like L. N Mittal, Mukesh Ambani , Kishore Byani , Sajjan Jindal attended the summit and ensured investment in the state. But, so far not a single big project blinked in the radar.

Nonetheless, foreign investors started pouring money in West Bengal. During the six year of Mamata regime, FDI flowed was more than investment during two decades of Communist regime.

More surprising was Chinese keenness to invest in the state. A big Chinese business group of 30 entrepreneurs attended the fourth summit. Of these ten were to attend first time. Acknowledging the Chinese zeal , the Consulate General of China in Kolkata, Ma Zhanwu, said “Chinese businesses attach great importance to the opportunities ,presented by eastern India and West Bengal”. He upped the ante on surge in India- China relation, despite India refused to be party to Chinese Belt and Road Initiative.

Currently, China is on investment binge in India. China is seen not as a foe, but an opportunity. Trust deficit began to dilute and bonhomie between the two leaders rose after the trade war broke. Both have vowed to make a relook to their relation and endeavor for a joint partnership for growth, instead of brickbat.

As of 2017, Chinese Ministry of Commerce recorded Chinese investment in India more than US $ 8 billion. According to Mr Zjao Gancheng, Director of Centre for Asia Pacific Studies at Shanghai Institute of International Studies “India has an wealth of experiences in utilizing international capital. There is no doubt it has become more attractive to foreign investors”,

Should West Bengal benefit from the Chinese investment binge? Does it have special attributes , which will attract Chinese investors over other states?

The main advantage of West Bengal over other states is its geographical placement in the east and close proximity to three countries, viz, Nepal, Bangladesh, Bhutan and North East. China is a dominant economic player for trade and investment in these countries. Given the benefits of road connectivity, West Bengal has an unique advantage for surface trade with these nations and North East.

In addition, West Bengal can provide a duty free movement of goods to the Chinese investors they are SAFTA members. China is not a member of SAFTA. Neither, it has FTAs with these countries Given West Bengal the gateway to these nations, enough opportunities will open for Chinese investors in the state to get the windfall of duty free regime and expand trade with these countries.

With the break of trade war between USA and China, India- China relation reached at crossroad. It has become a turning point for the two nations to reinvigorate their economic relations, burying the hatchet of political row. Chinese products are becoming costlier after the US tariff hike. Investors in China are comprehending to shift their productions bases in India and other countries.

The downturn in Chinese growth, triggered by trade war, caused a trust deficit among the foreign investors as well as Chinese entrepreneurs, to invest in China. Eventually, investment in China through M&A witnessed a downtrend, as compared to India

China is the third biggest overseas investor in the world. Chinese investors see India as the benchmark destination for overseas investment. According to Mr Liu Xiaoxue, an associate researcher fellow of Chinese Academic of Social Studies’ National Institute of International strategy, “Chinese investors see the country (India) as a benchmark destination , where development in many industries is moving at or near to the same pace as in China

China has already made a big investment in mobile telephone manufacturing in India. China brands now account for over 51 percent of the smart phones sales in India. Large penetration of Chinese top brands of smartphones, like Xiaomi, Oppo, One-plus, Gionee, Vivo, Huwai are posing challenges to Koreans and Japanese brands

To start with, in re-building West Bengal a propitious landscape for manufacturing, Supporting Industry is imperative. It refers to component and parts manufacturing industry. It is a low cost capital intensive and intermediate technology base industry. West Bengal can be an important destination for electronic industry for Chinese investors , which is supporting industry base. Manufacturing of mobile phones and electronic components are low capital and high labor intensive industries.

To this end, several factors substantiate West Bengal’ importance as a hub for manufacturing mobile phone and electronic component. Cheap wage, low land cost , surplus electricity and availability of highly skilled labour forces ( owing to three big technical education institutes in the state) can prove propitious for these industries.

Given the various advantages to West Bengal and ever since the trade war broke, triggering a turning in India- China relation, Mamata should focus on Chinese capital in the state.

China is emerging as a trend-setter in the foreign investment in the country. Given the historical linkage and a large number of Chinese domiciled in Kolkata, Chinese investment can be a challenge for her to re-build the state as an investment potential destination.

Views are personal



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Subrata Majumder

Subrata Majumder

Subrata Majumder is an adviser to Japan External Trade Organization (JETRO), New Delhi, and the author of “Exporting to Japan,” as well as various articles in Indian media, including Business Line, Echo of India, Indian Press Agency, and foreign media, such as Asia Times online and Eurasia Review .

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