Thursday, July 25, 2013

Chinese Firms Face Political Obstacles of Working in India

A story by me related to construction- however it shows the ailing state of bureaucratic decision making.

Chinese firms are eyeing construction projects in India for future revenue growth but already are beginning to see the constraints of doing business there. Long waits for visas, clearance issues and other factors stand in the way. Still, many industry experts expect the list of Sino-Indian projects to expand soon.
Trade between the once warring neighbors exceeded $66 billion in 2012 and is expected to reach $100 billion by 2015, according to the Chinese Ministry of Commerce. Geopolitics also is playing a part as the two nations recently held talks on resolving border conflicts and discussing a road map to reach a dynamic balance in bilateral trade. India has a trade deficit of $29 billion with China, its largest trade partner.
One of the Chinese road-and-rail firms in India, Shanghai Urban Construction Group (SUCG) is in a joint venture with Larsen & Toubro Ltd. (L&T) for the construction of a 2.4-kilometer underground twin tunnel awarded by the Delhi Metro Rail Corp. (DMRC) as part of a 9.37-km subway in New Delhi. To be completed in 120 weeks, the project involves the construction of 1.6 km using six tunnel-boring machines and 0.8 km using the cut-and-cover method.
"The JV is the first of its kind with a Chinese partner. With its past experience in DMRC's phase-one tunneling projects and ongoing phase-two projects, L&T would add value in successful completion of the project along with SUCG's vast experience in tunneling projects in Shanghai," said K.V. Rangaswami, L&T board member and construction group president. SUCG has constructed the New Delhi Elevated Subway viaduct for the second phase of DMRC's project and was the main contractor for Shanghai's 439-km subway network of 12 lines and 288 stations. L&T is the lead partner in the 51:49 joint venture.
Called the Heritage line because of its proximity to many monuments, the tunnel is a difficult task. To build one station, for example, a 300-ton TBM had to be lowered close to the 17th-century Jama Masjid mosque.
"Tunneling this section is quite a difficult and sensitive job because of the many historic monuments. The task is complicated by the rocky and sandy nature of the soil in this section," said Lu Yuanqiang, chairman of SUCG Infrastructure India, to a local wire service. The project has been delayed by more than three months as the company awaits clearance from Indian Railways to drill 40 ft under the railway line that passes on top. The approval is expected soon, a DMRC spokesman tells ENR.
Due to political friction between the two nations, obtaining visas for Chinese labor and management is a major hurdle for project teams. The application process often can take up to 24 months and frequently results in rejection, according to sources. Because of this, Chinese engineers frequently resort to communicating with field personnel through videoconferencing.
"We face visa problems, delays and uncertainties if the relationship runs into complications for political reasons," says Lu. "[India] is a very important market for us." Business there is "open, fair and just" compared to other world markets in which the firm has operated, he adds.

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