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India Developing a New “GIFT CITY”, like HK & Singapore To Attract Foreign Investments in India

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Can building a whole new city increase foreign investments in India? The map of India, specifically Gujarat, will soon have a new addition. GIFT City is being built from barren lands as a measure to enhance foreign investments in India. This new city is not just going to attract more foreign investments but is also slated to be at par with global financial hubs like HK and Singapore.

GIFT City or Gujarat International Finance -Tech City lies in an otherwise barren land spread across approximately 885 acres in Gujarat. The City’s CEO stated that GIFT has everything required to be on par with globally recognised financial centres.

Advanced Infrastructure and Opportunities for Foreign Investments in India at Gift City

The new city already has 2 stock exchanges that were built last year and the current exemptions by the government have virtually made trading tax-free. GIFT city is also slated to have its own regulator for finance to curb red tape and bureaucratic discrepancies that deter foreign investments.  Lower real estate prices, tax exemptions and many other incentives have enabled many companies to reduce expenses by up to 80 percent. This allows global investors an opportunity for foreign investments in Indian with competitive tax benefits.

Also Read: Is Growing Chinese Influence Hampering Pakistan FDI and Turning Investors Away?

While foreign investments were the main driving force the city is also targeting potential investors within India. The 2 stock exchanges in the city will be the only in the country allowing US dollars trading. As reported by CNN, the CEO of Bombay Stock Exchange stated that

“Eventually GIFT city should become a vehicle or a place for people from across India like Hong Kong has acted for China in the last 30 or 40 years”

From a Foreign Investments Hub to a Home

The main aim now is to make GIFT city appealing as not just a hub for foreign investments but making it a home for people. Currently, there are 3 office buildings with bus shuttles to and fro from surrounding areas for workers, 1 school and 1 data centre. The city will have its very first residential complex ready by May and a 4-tower WTC complex within the next 2 years. It is well connected and just about 30 minutes by road, from the airport in Ahmedabad.

All efforts are being taken to make this a globally recognised financial hub that not just brings in foreign investments but also challenges current leaders like Singapore and HK.

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Africa emerges as a new battle ground for India and China for trade, commerce war

India sees this initiative as an effort by China to flex its economic muscle and extend the reach of its influence. “However, India’s engagement with Africa is not limited to trade and commerce.

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Post the border clashes, India and China are striving to create a robust influence in Africa through humanitarian aid and investments. However, with the countries adopting different outreach strategies, analysts suggest that competition between India and China is unnecessary as there is room for both to make their presence felt. 

Why China’s $200 Billion ‘Gamble’ On Africa Has Failed Miserably?

According to Maria Siow, a China-based journalist and analyst, India’s renewed focus on Africa is a result of China’s growing footprint on the continent, not just in terms of trade and commerce, but also Beijing’s rising maritime interests.

China’s Belt and Road Initiative aims at connecting Asia with Africa and Europe through land and maritime routes which would enable regional integration and growth in trade and commerce.

Recently, Chinese Foreign Ministry spokesperson Zhao Lijian said during a press conference that a total of 44 African countries and the African Union Commission have signed cooperation documents with China on the Belt and Road initiative.

India can ‘no longer’ choke China at the Strait Of Malacca as Beijing finds solution

“It is a vote of confidence in China-Africa cooperation from our African brothers,” he added.

India sees this initiative as an effort by China to flex its economic muscle and extend the reach of its influence. “However, India’s engagement with Africa is not limited to trade and commerce.

The Indian diaspora, for instance, has been a major force in several African nations’ pursuit of prosperity and political participation,” said Swaran Singh, a professor at the Jawaharlal Nehru University’s School of International Studies.

JF-17 vs Rafale: Why Pakistani JF-17 Thunder Poses A Serious Threat To Indian Rafale Fighter Jets?

India and China stand far apart in terms of the size of their economies. India’s US$2.7 trillion versus China’s US$14 trillion which acts as a roadblock for New Delhi to make further inroads in African nations.

According to United Nations trade data, 39 African countries imported more than US$71 billion worth of goods from China in 2017 and only US$21 billion from India.

“African governments are therefore aware that in spite of their rapprochement with India, China remains the most important – and at the government level, the most trusted – development and investment partner on the continent,” said Lin Minwang, the deputy director of Fudan University’s Institute for South Asian Studies.

CPEC Project A ‘Trillion-Dollar Blunder’, Pakistan Calls It ‘Outstanding Initiative’

Nevertheless, India has not made huge loans to African countries and thus avoided being a major part of the serious debt problems facing by many African countries today.

However, it is expected that India’s investment in Africa will become more valuable especially in Africa’s health care and pharmaceutical sectors. Sizeable investments have already been made in oil and gas, mining, banking, pharma, textiles and other sectors in African countries under the strategic initiative, “Focus Africa” by the Government of India launched in 2002.

Zhang Yongpeng, a senior research fellow at the Chinese Academy of Social Sciences’ Institute of West Asian and African Studies noted that even though India posed a challenge to China’s strategy in Africa, for instance in bidding for commercial projects, the economic threats were not daunting for now.

Trump Would Not Have Supported India In A Possible War Against China – US NSA

African nations are unwilling to choose between China and India because of the accruing benefits and investments from both nations. Also, the African governments are avoiding being dragged in conflicts, especially during the ongoing trade and diplomatic tensions between the US and China and the border tensions between India and China.

“India tends to have largely positive perceptions as a fellow Global South democracy. China can sometimes be more controversial, for example, due to the recent ill-treatment of Africans in Guangzhou,” stated Cobus van Staden, a researcher at the South African Institute of International Affairs.

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Asia Pacific

China-Pakistan Economic Corridor Economically & Logistically Unstable – Experts

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China’s ambitious plan to transport oil across the Himalayas in Pakistan under the China-Pakistan Economic Corridor (CPEC) might be “economically unsustainable” and actually benefit the US in the ongoing US-China rivalry.

India-China Border Tensions Intensify As PLA Troops Occupy Heights, Build Fortifications & Install An ‘Enormous Signage’

China has pushed its way to conquer Pakistan’s construction sector with its multi-billion-dollar Belt and Road Initiative (BRI) offering it more than 40 projects. One of the ambitiously proposed projects includes an oil pipeline connecting Gwadar port to Kashgar in China’s Xinjiang province via the challenging and unstable region of Himalayas.  

Experts write — “Starting from sea level, it will have to cross the 4700-metre Khunjerab pass to reach the Chinese mainland, requiring heavy pumping equipment and significant power supply to keep the pipeline flowing.”

Pakistan Deploys Additional 20,000 Soldiers In North Ladakh On China’s Behest – Reports

Additionally, the author says that the region is prone to the periodic danger associated with earthquakes and landslides which adds to the regular costs of maintenance. The temperature also drops to as low as negative 30 degrees Celsius which would require heating technologies apart from the insulation.

Furthermore, the project is also believed to be economically unsustainable as a study formulates that it would cost approximately $10 a barrel to move oil from Pakistan to western China through pipelines, along with added $5 to deliver oil to demand centres in the eastern region.

Pakistan Deploys Additional 20,000 Soldiers In North Ladakh On China’s Behest – Reports

On the other hand, it costs just $2 per barrel to ship oil from the Persian Gulf to the east coast in China. The author says that “this translates to China losing roughly half a billion dollars per year through pipeline shipments.”

Meanwhile, China has been pressing the project, however, the Xinjiang province of China is already supported by a massive network of oil and gas pipelines from Kazakhstan and Russia. Many experts speculate that China’s interest in the project in Pakistan stands solely due to the Malacca dilemma that could work in favour of the United States.

India-China War: China Has No ‘Military Advantage’ Over ‘Battle-Hardened’ Indian Army – CNN

VS Reddy, a research assistant at the Nuclear and Space Policy Initiative of the ORF believes that “China has been pressing to complete the Gwadar port in Pakistan and build the China-Pakistan Economic Corridor (CPEC), allowing it to be connected overland to an Indian Ocean port.

Gwadar and CPEC allow China to circumvent the Strait of Malacca which can be blocked by rival navies in the event of a conflict termed as “Malacca Dilemma”. Many political analysts opine the Strait of Malacca situated between Malaysia, Singapore, and Indonesia connecting the Indian and Pacific Oceans could help the US gain advantage from an event of Chinese blockade in the region.

How Many Chinese Soldiers Were Killed In The India-China Clash At Galwan Valley / Ladakh?

“Since China’s economic growth is highly dependent on the sea routes for receiving energy along with other raw materials which it uses for cheaper productions which are later shipped back as finished products other continents, it could be a major blow to China,” tells Ragahvan Srivastava to EurAsian Times.

India has established a strong naval presence in the Andaman Sea adjacent to the Strait of Malacca and is regularly partnering with the U.S. and other countries in safeguarding it. “Such a presence can be translated into a formidable blockade. On the other hand, China has yet to showcase its capabilities and willingness to fight to keep this Strait open for its ships,” writes Vidya.

China-Australia Spat: Australia To Invest $270B In Defense Capabilities As Tensions Soar With China

Rahul Jaybhay / Vipasha Kaushal

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Economy

Indian Startups Ditch Chinese Investors & Move Towards Japan As India-China Ties Worsens

It is hard to estimate whether Japan will be able to match China in terms of investment and risk appetite as 18 of India’s 30 unicorns — private companies with a valuation of at least $1 billion — have a Chinese investor.

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With deteriorating ties between India and China, Indian startups are looking towards Japanese investors as the COVID-19 pandemic has left them high and dry. Experts wonder if Japan can match China in terms of investment and risk appetite.

With the ongoing lockdown and the fears of raging virus, businesses have resisted opening its operations fully which has led to ploughing back of past profits and earnings. While it is easier for long-established profit-making businesses to survive, though, for a limited period in such a situation, it can prove to be fatal for the startups with little or no profits to fall back on.

In April, the Indian government modified the Foreign Direct Investment (FDI) policy which would require the government’s approval for nations sharing a border with India to invest in the country. Such a move is aimed to curb opportunistic takeover, especially from China, when the country is still in the process of fighting the COVID-19 pandemic.

There is a rising sentiment against Chinese products in India due to the recent border clashes. After the troops of the two neighbouring countries clashed on the LAC in the Galwan valley leaving 20 Indian troops dead and an unknown number of Chinese casualties, people are pledging to boycott Chinese products.

“In the last 12 to 18 months, a lot of Chinese VCs or Chinese companies want to throw money at Indian companies, and that has inflated a lot of deals,” said Chua Kee Lock, CEO of venture capital firm Vertex Holdings. He further added that the decline in Chinese investment due to the new regulations means startup valuations in India will be hit harder than in other countries.

With growing ties between India and Japan, Indian startups are looking to get investors. “Japan, by any stretch of the imagination, is one of the top candidates [to enter India],” said Rakesh Mishra, founder of electric powertrain startup Entuple E-Mobility, during his presentation organised by National Association of Software and Service Companies (NASSCOM) to woo the Japanese investors.

“At this juncture, I won’t be interacting with any Chinese investors,” said Ajit Patil, a co-founder of DeepTek, a Pune-based medical startup. He raised several million dollars in funding from local investors and Japanese medical imaging company Nobori in May.

Toppan Printing, a Japanese commercial printing company joined a $15 million funding round for Medikabazaar, an online shopping site for hospitals making it Toppan’s first investment in an Indian startup.

“Many parts of Southeast Asia and India are ahead of Japan in going digital,” said Hiroshi Eguchi, who leads strategic investments at Toppan. “India is also attractive as a market,” he added.

However, it is difficult to estimate whether Japan will be able to match China in terms of investment and risk appetite. According to Gateway House, a Mumbai-based think tank, 18 of India’s 30 unicorns — private companies with a valuation of at least $1 billion — have a Chinese investor.

Another Japenese fund, SoftBank is one of the biggest investors in Indian companies like Paytm, Oyo and Ola with about $10 billion in investments.

“There are many companies that make large acquisitions but a better approach may be to find success through various investments,” said Takeshi Ebihara, general partner at venture capital firm Rebright Partners, said during the NASSCOM event.

Analysed By Smriti Chaudhary. Invaluable inputs from Nikkei Asian Review

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