Taiwan has raised an issue with the Indian government because it has subjected Taiwanese investors to a certain rule on investments which are applicable only to investors from six other countries — which include China, but not Taiwan — a Ministry of Foreign Affairs official said yesterday.
The Indian government has responded positively to Taiwan’s demand, but “we have not yet found it satisfactory,” said James Chou (周穎華), deputy director-general of the ministry’s Department of East Asian and Pacific Affairs.
Continental Engineering Corp (大陸工程), one of Taiwan’s prominent civil infrastructure and building contractors, was asked by the Reserve Bank of India (RBI), India’s central banking institution, to send documents to the bank for approval after it secured a bid to build the New Delhi metro system earlier this year, Chou said.
The bank cited a regulation under India’s Foreign Exchange Management Act (FEMA) that foreign companies must obtain approval from RBI before they set up a project office in India to open an account for transfer of money in bids, and the ministry presented objections to that as soon as it received the information, Chou said.
According to the act, only investors from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran and China are subject to seeking the bank’s approval before they can join bidding for Indian government tenders, not Taiwanese investors, Chou said.
Continental Engineering Corp has won 10 project bids in India since 2005 and has never had such a problem before, Chou said.
After the ministry has gone back and forth in its negotiations with related authorities in the Indian government since March, the RBI responded in a letter in May, saying that Continental Engineering Corp would not be required to send documents this time, but RBI approval would be necessary in future cases, Chou said.
Chou said the ministry deemed the RBI’s decision on Continental Engineering Corp’s bid for the metro system as positive, but remained unsatisfied with its policy to apply the act to Taiwanese investors.
It was a “miscommunication” involving RBI personnel, rather than political pressure by China on India that was behind these cases, Chou added.