Hong Kong has been constantly wooing India to step up trade but the China bogey may come in the way of trade relations between the two, fear businessmen in that country. While HK businessmen have been lobbying with Indian government to consider Hong Kong and China as two separate countries instead, they are now getting to know that restrictions applied to Chinese companies in India are now applying to Hong Kong companies as well.
Raj Sital, Chairman of the Indian Chamber of Commerce Hong Kong is of the view that Hong Kong is the super connector that ties China with the rest of the world including India. But the glue is now losing its power as far as India is concerned due to New Delhi’s security concerns over China.
In February, CY Leung, chief executive of the Hong Kong Special Administrative Region had led a business delegation to India to discuss bilateral trade and iron out sticky issues. According to M H Arunachalam, immediate Past Chairman of the Indian Chamber of Commerce Hong Kong, who was part of the 200-member delegation, three areas that seemed problematic were discussed.
These are: A comprehensive double taxation avoidance agreement (DTA) that has been in discussions for over a decade and is yet to be signed; The fact that now Hong Kong based companies cannot open offices nor even representative offices in India automatically and directly, but need prior permission from the RBI, a process that sometimes can take over a year. Citizens of Hong Kong now cannot buy property in India without prior permission. Not only that, even properties that were purchased earlier can be sold but one cannot repatriate the money without prior permission.
Sital suggests India needs to recognize that Hong Kong and China may be one country but are actually two systems. Ironically, India has a double taxation treaty with China. The Indian government feels that it is a sensitive issue and needs thinking. For Hong Kong, the India push is important as its exports were down by 3 per cent in 2015. Major export items from Hong Kong to India are telecom equipment and parts which saw a jump of over 32 per cent from that of the previous year to $5,129 million. It also accounts for 39.3-per cent share of its total exports to India.
