India Retaliates Economically! Modi Government to Block China’s Biggest Ever Acquisition in India

The Doklam standoff has gone on for over a month now. Chinese state media has repeatedly threatened India with dire consequences if India doesn’t withdraw its troops, while the Indian Army has made elaborate preparations in the area to thwart any Chinese aggression.

Apparently, the order from the political leadership is clear – don’t trigger violence, but prepare to strike back hard if the Chinese indulge in any misadventures. Although, the Modi government isn’t going easy on China on an altogether different front.

Shanghai Fosun Pharmaceutical Group Co. has proposed to acquire 86 percent stake in Gland Pharma Ltdfor $1.3 billion. But the Modi government is poised to reject what would have been the biggest ever Chinese acquisition in India.

The Cabinet Committee on Economic Affairs, which is chaired by Prime Minister Narendra Modi, has decided to block the Chinese firm’s purchase. The companies are yet to be formally notified of the move.

This would be a major setback for Fosun Pharma which had sought Gland Pharma’s stable of generic injectable medicines and facilities approved to manufacture products for sale in the US. Fosun Pharma is backed by Chinese billionaire Guo Guangchang.

The deal had already completed Indian antitrust filings and been reviewed by the country’s Foreign Investment Promotion Board.A representative for Fosun Pharma, however, declined to comment beyond an exchange statement last week.

Chinese drug-makers have grown extremely ambitious in recent times to acquire firms that give them access to the US which is the world’s biggest pharmaceutical market.

This move by the Narendra Modi government is a sign to China that India won’t tolerate it flaunting its money-power. China has grown very adept at economic warfare whereby it promises huge investments and acquires companies in smaller nations, thus pushing the nation toward greater debt. When the nation finds it hard to repay its debt, China grants some ease on debt repayment but in return asks for further opportunities in the country. This only leads to China becoming more and more influential.

Chinese anger with India in recent times has been primarily due to India not succumbing to its colonial-style OBOR project. India explicitly boycotted it, which the Chinese may not have expected. And if they did expect it, they didn’t approve of it. It expects all nations – small or large, rich or poor, developing or developed – to ‘bend the knee’. But India won’t.

The significance of the rejection of the purchase by the Modi government should also come as a signal for the Indian public. The government is ready to take on China economically and even militarily if needed; now we must do our part by not buying Chinese goods. There isn’t any better way to tame the Chinese than by inflicting economic pain on them.

Vinayak Jain