The amendment of the 49-year-old Enemy Property (Amendment and Validation) Act after which the Narendra Modi government plans to auction more than 9,400 properties of those who took citizenship of China has made China jittery.
Chinese investment in India has grown rapidly in the past few years. China fears India can confiscate assets of its companies, such as Xiaomi and Lenovo, if the two countries enter a military conflict. Last year, Indian and China faced off for months over construction by Chinese troops in the Doklam region. Though the conflict was resolved, tension persists in India-China relations.
“If China and India become involved in a military conflict, the assets of Chinese companies doing business in India may be confiscated by the Indian government,” said an article in state-run Chinese news outlet Global Times.
It says economic reforms introduced by PM Modi have made India an attractive investment destination but the amended law can scare away Chinese investors.
“…if the Enemy Property Act sparks alarm among Chinese investors and hinders India’s efforts to make itself a sound investment destination, all these other attempts would have been in vain. To rebuild investor confidence, India requires legal reform. Confiscating assets left behind by people who took citizenship of China can easily be viewed by the public as a hostile act against China and damage China’s outbound investment toward India,” the articles said.
“In recent years, many Chinese companies, including smartphone maker Xiaomi and computer producer Lenovo, have turned their eyes toward India. In 2016, China’s direct investment in India was reportedly several times the level of the previous year. This investment created many jobs for young people in India, which faces an unemployment dilemma. However, increasing investment doesn’t necessarily mean that Chinese companies were unaware of the risks involved. Some Chinese people were scared during the border standoff. If India cannot reassure Chinese investors by taking steps to ensure the safety of their assets or personnel, the amendment of the Enemy Property Act will hit investor confidence,” said the article.
According to data provided in the report of the parliament select committee on the bill, there are 9,280 immovable properties belonging to Pakistani nationals encompassing 11,882 acres. The total value of immovable properties that are vested with the custodian stood at Rs 1.04 lakh crore. Movable vested properties consist of shares in 266 listed companies valued at Rs 2,610 crore; shares in 318 unlisted companies valued at Rs 24 crore; gold and jewellery worth Rs 0.4 crore; bank balances of Rs 177 crore; investment in government securities of Rs 150 crore and investment in fixed deposits of Rs 160 crore.
Besides this, there are 149 immovable enemy properties of Chinese nationals with the custodian in West Bengal, Assam, Meghalaya, Tamil Nadu, Madhya Pradesh, Rajasthan, Karnataka and Delhi.
An ET Intelligence Group investigation in 2008 had revealed that the shares vested with the custodian were in listed entities such as Wipro, Cipla ACC, Tata and DCM group companies, Bombay Burmah Trading Co., Ballarpur Industries, DLF, Hindustan Unilever, ITC, Bajaj Electricals, India Cement and Aditya Birla Nuvo.