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The border clash in the Galwan valley between Indian and Chinese soldiers was sure to take its toll on trade between the world’s second and fifth largest economies. Even if the ban on 59 Chinese mobile apps by India is ignored, there are clear indications that India has taken a tough stance against Chinese businesses growing and deepening their presence in the country.

The Maharashtra government on June 22 cancelled investment proposals worth Rs 5,000 crore by three Chinese companies. These proposals were cleared a week ago by the Uddhav Thackeray government. Closely followed this development, Mumbai Metropolitan Regional Development Authority (MMRDA) cancelled the bids of two Chinese companies who were supposed to supply passenger coaches for the city’s 20-km long Monorail network.

While cancelling the Chinese bids, MMRDA said it has taken its decision in line with Prime Minister’s Narendra Modi’s call for a self-sufficient India in the wake of the coronavirus pandemic outbreak. MMRDA has said it is now in talks with some Indian companies to manufacture the Monorail rakes.

According to a MMRDA official, “We are in talks with Indian manufacturers like Bharat Earth Movers Limited (BEML), Bharat Heavy Electricals Limited (BHEL) and Titagarh. The latter has also been positive on manufacturing the rolling stock which is quite a breakthrough.”

Earlier, MMRDA had released a note stating its displeasure with the two Chinese manufacturers. According to the note, MMRDA has stated, “They were continuously asking for revisions in terms and conditions and eligibility criteria, even after uploading of CSDs (Central Supplier Database).”

 About a week after the Galwan clash, Maharashtra Industry Minister Subhash Desai said the state government has suspended the over Rs 5,000 crore investment proposal by three Chinese companies including automobile company Great Wall Motors Ltd. The deals for these investments were signed barely a week ago on June 15. He said the decision was taken in consultation with the Union government and the suspension of the investment proposal does not mean that the MoUs have been terminated. He added, “We will wait for the central government to announce a clear policy regarding these projects in the current environment.”

Great Wall Motors’s investment plan worth Rs 3,770 crore looks to produce sport-utility vehicles and electric vehicles from their manufacturing facility at Pune’s Talegaon which it acquired recently from General Motors. After SAIC Motor Corp’s MG Motor, Great Wall Motors would be the second big Chinese automaker to make its debut in India.

A joint venture between India’s PMI Electro Mobility Solutions and China’s Beiqi Foton Motor Co. (Foton) for setting up an electric bus factory at Talegaon is among the three projects cancelled by the Maharashtra government. The Chinese investment in this project was around Rs 1,000 crore. The third project involved Chinese engineering company Hengli Group, which was supposed to bring investments worth Rs 250 crore.

At the virtual MoU signing ceremony, Maharashtra Chief Minister Uddhav Thackeray had said that he would ensure that industries planning to invest in the state do not face any difficulty. But his stand vis a vis Chinese companies took a sharp U-turn after the all-party meeting called by Prime Minister Narendra Modi over the intrusion of Chinese forces into the Galwan valley. At the meeting, Thackeray had said, “India wants peace but that doesn’t mean we are weak. China’s nature is betrayal. Our (central) government can give a befitting reply….We are all one. We are with you, Prime Minister. We are with our forces and their families.”

At the agreement signing ceremony, Parker Shi, Managing Director, Great Wall Motors, India Operations, had said that the company plans to invest $1 billion in India in the next few years to set up its R&D and supply chain.

Though the tension seems to have eased with the retreat of Chinese soldiers from the Galwan valley, the impact that Chinese aggression has cast on business relations will take longer to fade away.