Airtel’s Chinese banks loan may impact ‘Make in India’

Recently, China Development Bank and Industrial Commercial Bank of China agreed to loan $2.5 billion to the India’s largest TSP – Bharti Airtel. This move could be a counter strategy from China to hamper manufacturing in India.

While, this is definitely good news for Airtel enabling them to infuse money into the system for expansion within India and across some global markets where the operator is present, for the country this could be counterproductive.

At a time when India is attempting her best to push manufacturing in the country under the umbrella campaign of ‘Make in India’, such loans, especially from a country like China, could be a part of their countering strategy to ensure that they don’t lose market opportunities in markets like India, which relies heavily on China for the supply of equipments and devices in a domain like telecommunications.

In view of this scenario, could it be China’s new strategy to ‘control’ the market by offering loans and ensuring that the market still remains with them. Though, it never comes in public, but such loans, especially from Chinese banks are with riders restricting procurement from their country only. This means, Airtel could not be buying only from Chinese vendors – Huawei and ZTE especially.

Now, even if somebody starts manufacturing in India with the visible market potential, such under-workings will not allow the market to buy from these and will still be compelled to buy from the Chinese suppliers.

Is this something that China has really resolved or I am reading too much out of it? Time will judge. But, apparently, China works as a nation and not just as economy. So, they will always have an integrated approach towards solving a problem that could affect them.

And, that is why I believe this is just the beginning of their counterstrategy and we shall soon see them bailing out companies in India strategically to ‘control’ their procurement.

In this scenario, how will then ‘Make in India’ become a success.

Manufacturing is a prerequisite, but having a market is equally important. This is where India needs a comprehensive and holistic approach of the things. We might have become happy that the recent auctions raised ? 100,000 crore or so, but it at the same time drains our companies and they have to look outside to comfort.

To boost and promote manufacturing in the country, while our efforts should be at building the scale and competencies, we must also ensure that the demand remains within India. Otherwise, the measures like Preferential Market Access (PMA) will only turn ineffective and we shall see for want of sugar icing, the entire dessert getting rotten.

First published in ET Tele-Talk on May 27th, 2015

Categories: Government, Telecoms

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