Attracted by Indiaâ€™s infrastructure development programme, state-run Chinese firms, including China Harbour Engineering Co. Ltd and China Datang Corp. (CDC), are looking to buy Indian companies in the engineering, procurement, construction (EPC) and power generation space, respectively to drive their business, said two people aware of the Chinese firmsâ€™ interest.
While CDC, one of Chinaâ€™s largest power generation utility, has been attracted by Indiaâ€™s stressed power projects, another government-owned firmâ€”China Southern Power Grid is in discussions with Essel Infraprojects Ltd for jointly bidding for power transmission projects, said one of the two people cited above.
This comes in the backdrop of Indiaâ€™s plan to invest as much as Rs3.96 trillion in the current financial year to bankroll its new integrated infrastructure plans comprising roads, railways, waterways and civil aviation.
However, the domestic industry has been raising concerns about Chinese firmsâ€™ participation in Indiaâ€™s infrastructure projects given their strategic importance. There have been instances in the past when India stopped giving clearances to telecom equipment imported from China over security concerns.
â€śChina Harbour Engineering is looking for acquisition in the EPC space across sectors. CDC has also become interested in acquiring stressed power projects,â€ť said the first person aware of the companyâ€™s India strategy, requesting anonymity.
CDCâ€™s interest comes at a time when the government is trying to address the problem of stressed assets in the power sector. JM Financial Research, in an 8 March note, wrote that its 2016 study of stressed power assets had concluded that of the total 28 gigawatts (GW) generating capacity in question, assets accounting for 14GW were at high risk.
The second person who also didnâ€™t wish to be identified said that Chinese firms have been trying to explore an India piece to their growth strategy.
China Harbour Engineering is a unit of China Communications Construction Co. Ltd. Chinese firmsâ€™ interest stems from ambitious plans such as Sagarmala and Bharatmala. While the total road length to be developed as expressways under Bharatmala will be around 51,000km, the Sagarmala programme envisages construction of new ports to harness the countryâ€™s 7,517km coastline and setting up as many as 142 cargo terminals at major ports.
â€śChina Southern Power Grid has been looking to bid for power transmission projects in India and is in discussions with Essel Infraprojects for the same,â€ť said the first person cited above.
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Subhash Chandraâ€™s Essel Group has been trying to ramp up its energy sector plans, including exploring a solar module manufacturing facility with one of Chinaâ€™s largest solar equipment maker GCL-Poly Energy Holdings Ltd, Mint reported on 22 March. Essel Infraprojects Ltd, an Essel Group firm, has a presence across sectors such as green energy, transportation, electricity transmission and distribution, and urban infrastructure.
Experts say there may be some traction on the EPC part of the Indian infrastructure play by the Chinese firms but remain cautious about those projects which may involve asset ownership.
â€śOn the EPC part, it is an equal opportunity for everyone to come in. On others, there is a question on how much of fruition will happen because of issues over ownership of the asset. It depends on their interest and the risks associated,â€ť said Jagannarayan Padmanabhan, director, transport and logistics at Crisil Infrastructure Advisory.
Queries emailed to the Chinese embassy in New Delhi, China Communications Construction Co., China Datang, China Southern Power Grid and Essel Infra remained unanswered.