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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Thousands of Chinese engineers and technicians are struggling to obtain Indian visas, highlighting a bottleneck in the process and a potential hurdle in India’s push to become a major “China plus one” manufacturing nation. “The flow of skills critical for the development of the electronics industry has halted,” said Pankaj Mohindroo, chair of the India Cellular & Electronics Association. Thousands of Chinese citizens have had their business and employment visa applications rejected over the past two to three years, he said, with many others not applying for “fear of rejection”. India in 2020 put in place some of Asia’s strictest curbs on Chinese business, against the backdrop of the Covid-19 pandemic and deadly border clashes in the Himalayas that killed at least 24 Indian and Chinese troops. The external affairs and home affairs ministries, which oversee visa provision in Indiadid not respond to requests for comment about the reported backlog. The country has managed to draw in some multinational companies in sectors such as electronics looking to diversify their supply chains and sales away from Chinaincluding Apple and its supplier Foxconn, which are building their manufacturing capacity in southern India.India-based global manufacturers rely in many cases on Chinese engineers and technicians to help install or operate their plants, but they have fallen afoul of India’s bearish policies vis-à-vis Beijing. “The current process is painful, creates uncertainty and is holding back our aspirations to increase scale and value addition,” Mohindroo told the Financial Times. “Even Chinese nationals who have been serving in the US for years in these companies are having challenges, mostly rejections,” he said. “This is not hurting only Chinese companies, but predominantly hurting American, British, Taiwanese, Japanese and Indian companies too, who are building capabilities in India.” Narendra Modi has during a decade in power championed a “Make in India” manufacturing drive meant to create jobs and promote exports. The push has dovetailed with the search by global businesses for alternative factory sites to China in countries including India and Vietnam. However, India’s scrutiny of Chinese foreign direct investment and visas for its citizens has in some cases slowed this shift, according to Indian industry and government officials. The Modi administration four years ago introduced a regulation dubbed “Press Note No 3” that requires central government approval for any FDIs by companies in countries with which India shares a land border. At the time New Delhi said the rule was aimed at “curbing opportunistic takeovers/acquisitions of Indian companies”. While the measure did not make specific reference to China, it is widely seen in India as primarily targeting Chinese companies. Electric vehicle maker BYD and Apple supplier Luxshare are among the mainland Chinese companies that have failed to secure permission to expand in the subcontinent, according to Indian government officials. The ICEA is advocating “automatic” government approval for companies in which Chinese investors hold up to 49 per cent, Mohindroo said. China surpassed the US as India’s biggest trading partner in 2023-24, but bilateral diplomatic relations remain icy because of their unresolved border dispute. India has, however, expedited visas for some Chinese citizens for projects that fall under the Modi government’s production-linked incentives scheme — the billions of dollars’ worth of subsidies earmarked to promote manufacturing. RecommendedIndia is trying to promote investment in strategic industries, including technology and electronics, as part of the government scheme.Mohindroo said the fast-tracking of PLI-related visas was “a silver lining”. An Indian government official said the backlog on these visas had “come down or is almost gone”. “We are aware China is the world’s factory,” that person said, speaking anonymously because he was not authorised to be quoted officially. “It cannot be dispensed with.”Some Chinese companies have stepped up their presence in India by forming joint ventures. SAIC Motor, for example, in March announced a $1.5bn tie-up with steelmaker JSW to build and sell MG-branded EVs in the world’s third-largest car market.
