Friday, December 15, 2017

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN

About discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.

Transferring Chinese Construction Processes to India’s Workforce

Op/Ed Commentary: Chris Devonshire-Ellis

Jun. 8 – The recent problems caused by the non-issuance of Indian visas to Chinese workers raises several issues, the most important of which is largely being ignored by the Indian government. To explain the impasse, Chinese construction companies have been engaging in several build-operate-transfer (BOT) contracts with Indian companies and on some occasions, local governments. With the package often including Chinese labor, the total bundled up contract represents a one stop shop for India-based infrastructure projects, with the entire project being handled by the Chinese contractor.

Things have got murky by the Chinese habit (no doubt factored into the contract price) of bringing to India hundreds if not thousands of workers to actually take on the task. Typically living in temporary shanty towns, they are Chinese managed, fed, transported from place to place and paid. It’s an excellent and attractive solution to getting infrastructure projects completed with a minimum of fuss and usually on schedule. The only fly in the ointment has been the visa issue – such workers have typically been working in India without the required visa documentation in place. A lack of work visa contravenes their terms of stay and places them outside the solid jurisdiction of India’s tax laws, which require individual income tax payments for workers in the country.

Indian immigration authorities and the tax department have got themselves in a muddle over the thousands of unregistered workers, while local politicians have weighed in with the usual “Chinese are taking our jobs away” styled rhetoric. The resulting row has meant a clampdown on the issuing of Indian visas and canceled and delayed projects. It also signifies a breakdown in communications between diplomatic, local governmental and commercial interests in India. It has done no one any good, least of all India’s demand for infrastructure projects to be completed on time.

It’s a not untypical case of Indian bureaucracy getting its knickers in a twist, preventing any progress, denying development and maintaining the status quo. While politicians may argue that the Chinese haven’t now taken any Indian jobs as a result, the truth of the matter is that the Indian workforce and management hasn’t proven capable of taking them either. What’s actually been lost then is not employment – it’s the much needed infrastructure at a reasonable price for the minimum of Indian effort. The impasse continues.

At this stage, Indian executives in the government and the corporate sector need to start getting pragmatic over the issue. While the political issues of Chinese labor in India cannot be ignored in India’s rampant social democracy, neither can the good that Chinese construction processes bring to the nation. The sooner the Indian authorities start to wake up to the needs of the Indian workforce – training, proper management – and start to look at the Chinese model as a way forward, then the better it will be. The time is over ripe for India to learn from the Chinese and start to acquire those processes that have made China such an awesome labor force. Petty arguing over visas and jobs for the locals disguises the real problem – India’s labor force is woefully lame.

Getting Chinese management and work processes into the Indian workforce should be a major goal, whereas instead postponed projects, petty debates and Chinese labor returning to China is denying India the opportunity to listen, watch and learn. Unemployed Chinese workers sent home from India for visa infringements is not the answer.

Chris Devonshire-Ellis is the principal of Dezan Shira & Associates and oversees the firm’s Asian operations, where it provides corporate legal advice, establishment, tax planning and accounting services in China, Hong Kong, India and Vietnam. He can be contacted at [email protected]. Chris also contributes to Asia Briefing’s other titles, India Briefing, China Briefing and Vietnam Briefing.

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3 Responses to Transferring Chinese Construction Processes to India’s Workforce

  1. Austin says:

    well sentence “Chinese are taking our jobs away” is totally unethical.. who have ability who have caliber those can do..

  2. Chris Devonshire-Ellis says:

    It’s not unethical, it’s political. And the Chinese would react in the same way, just as the US does.

  3. Hi Chris,
    A very correct and informative post on the subject. Hope Indian bureacracy or even some politcos read it.They will like to have some corruption thrown in like employing East european Pilots for AirIndia who pay a percentage of their salaries to the Civil Aviation bureacracy through their agents in Dubai.

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