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Chinese electricity projects in India put on ice
Published on: 2010-03-24
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Restrictions on the import of skills are forcing Chinese companies to suspend the building of badly needed power plants in India to rid the country of its crippling energy deficit.

A Delhi-based Chinese official said as many as 10 Chinese companies had had to suspend work on power projects - viewed as a top priority by the Congress party-led government - because of a shortage of skills and difficulties in importing their own technicians from China.

"Without Chinese people the projects can't go through smoothly," the official said. "They (India) don't have enough technicians and skilled workers."

The decision is not being met with universal alarm. Some Indian security officials are concerned about the country becoming too reliant on Chinese-made infrastructure as bilateral tension mounts over the disputed border territory of Arunachal Pradesh and restrictions on the import of Chinese mobile handsets and toys. They say India needs to be more self-sufficient to defend itself from any future Chinese aggression. They worry that technology imported from China - a close economic partner of arch-rival Pakistan - could be used against India's national interest.

India aims to add 10,000 megawatts of power generation capacity to its grid in the current fiscal year which runs until the end of this month. Many parts of the country are without electricity, while others regularly suffer severe power cuts.

India's skills shortage is viewed as a big brake on the country's ambitions to improve its infrastructure and sustain high levels of economic growth. The World Bank has warned that a shortage of practising engineers imperils the country's ability to support growth with better roads, ports and railways.

Chinese equipment accounts for as much as a quarter of new capacity. But the Chinese official said the price of a skilled worker in the construction industry was twice the cost in India of the equivalent in China.

Last year, India introduced new limits on the use of foreign labour. Only 1 per cent of a project's workforce can be foreign. On power projects the limit is 40 skilled workers.

Parvesh Minocha, the managing director of the transport division of Feedback Ventures, an infrastructure consultancy, said India would be forced to turn to expatriates, particularly experts in project management, to help it meet goals in an environment in which cost and time overruns are the norm.

China, India's largest trading partner, is a big supplier of power equipment and other infrastructure. It also has a reputation for building power stations faster than its neighbour. McKinsey, the management consultancy, estimates that it takes double the time to build a power station in India as it does in China.

The suspension of Chinese-built power stations follows a rise in friction between Beijing and New Delhi. The Indian government has said China has become more assertive in the past two years over its territorial claims, which led to conflict between the two countries in 1962.

Some Chinese companies, such as Huawei, are making efforts to localise their operations to be seen more as an Indian company. Its executives say they need a strategy to overcome prejudice against China's low-cost contractors and equipment in spite of their wide application across India's fast-growing telecommunications industry.

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