FE Editorial : Chinese soup

Tue, Oct 27 03:54 PM

The hurdles faced by China's Longian Road and Bridge Ltd company in securing employment visas for its Chinese workers has led to a suspension of work on two important road projects in Himachal Pradesh. The company had earlier successfully bid for the World Bank-aided project in an open process. The company, which had started work on the 45-km-long Mehatpur-Una-Jahalera-Amd road in May and the 81-km-long Theog-Kotkhai-Rohru road in June last year, had submitted winning bids that were 16-32% lower than competitor Indian firms. The firm had brought Chinese workers on legitimate business visas for short-term project-related work, but the government now insists that they must return and apply for employment visas. This will simply delay the project—the government could have instead converted the visas of the concerned workers immediately. Now, the apple growers of Himachal stand to suffer as these roads were critical to their plans to transport produce from the farm to the market in the most efficient and most timely (apple is perishable) manner as possible. Our protectionism on Chinese labour is perversely hurting our local apple farmers. And that really is the lesson that the government must learn—protectionism may bring short-term political gains, but it will lead to a loss of economic welfare for the country as a whole. The government often tries to use the 'security concerns' shield to justify protectionism against China in particular. In the case of building roads, this argument has no basis at all.

The government's decision to restrict Chinese labour will have a negative impact beyond just this one case. Consider the fact that we do not have enough road-building companies domestically that can build all the roads, which our energetic roads minister wants to complete in record time. By imposing unnecessary conditions on foreign firms, there will be even fewer bidders for important road projects in India, hardly a desirable situation given the urgency of expanding and upgrading our road network. Also, if local firms are less efficient than their foreign counterparts, particularly from China, shutting out foreign firms and workers will simply mean that we will witness more time delays and cost overruns in the completion of projects. Competition, on the other hand, will be a force for good for Indian firms, too. At the level of national policy, India, which has hugely benefited from the large number of its skilled and unskilled emigrant workers, should by default take a more liberal approach to foreign workers. We can't preach liberalism to others while being protectionist ourselves.

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