China Offers 30% Finance for Indias Infrastructure Plan

Published Date : Feb 20, 2014

China has shown an interest in funding a significant part of India’s infrastructure development despite the fact that the former’s previous offers for such investments have been declined by an Indian government that’s wary of China entering critical sectors of the country. An investment in infrastructure would allow China close access to critical sectors such as power and telecom, and India is clearly nervous about giving China the green signal over this offer.

However, this has not discouraged China from making yet another concerted bid that will see its workers and companies being closely involved in upgrading India’s squeaking power, road, and rail infrastructure, as well as its telecom network. 

A Chinese working group recently submitted to the Indian government a five-year plan for economic and trade planning cooperation. It offered to finance up to 30% or 1 trillion of the total targeted infrastructure that would be planned during the twelfth Indian Five-Year Plan spanning from 2012 to 2017 that has been allocated funds of USD 300 billion.

According to sources close to the matter, this is the biggest such offer that has been made an individual nation. It even exceeds the funds hitherto contributed by Japan-a country that has financed a number of ambitious infra projects undertaken by India.

India’s commerce department is now slated to hold a meeting of various ministries to discuss this massive investment proposal by China, said sources that were familiar with the matter.

China, that is estimated to hold over USD 3.8 trillion in reserves, is constantly looking for ways to deploy these reserves efficiently. Interestingly, the country’s reserves keep expanding as it records trade surpluses with other nations. The country has thus far invested massive funds in developing its own infrastructure, and is now seeking out new investment avenues.

In the recent years, it has deployed funds in Asian countries such as Sri Lanka, Pakistan, and Nepal besides other nations in the African continent.