Thursday, 23 March 2023
Deal with China on Holcim acquisition could cost Govt India’s friendship

Deal with China on Holcim acquisition could cost Govt India’s friendship

The government’s stated intention to ‘Look to Asia’ in the aftermath of Brexit has been compounded by what appears to be a whisper from China for the proverbial pound of flesh in the form of the acquisition of Holcim Lanka Ltd.

It is revealed that China Resources Cement Holdings Ltd, a subsidiary of the China Resources Group which in turn is a state-owned Chinese enterprise, has bid to purchase Holcim Lanka Ltd for an amount much higher than the market price.

The hush-hush Holcim deal, if it goes through, is likely to be a huge setback to Indo-Lanka relations which are being repaired after suffering a lot of damage during the previous regime. While Sri Lanka needs the support of both India and China at this juncture it cannot afford to antagonize one by showering favours on the other, analysts claim.

While the acquisition of a private cement manufacturing entity seems trivial, analysts point out that China’s strategic interests outweigh the economic benefits that could accrue consequent to such an acquisition since it gives access to the Galle and Trincomalee harbours. China already has a prominent presence in the Colombo and Hambantota harbours.

The Government, despite its early criticism of China has since done an about-turn and has all but pleaded with the Asian giant to step in since the yearned for help from the West has not materialized. It must be noted that the previous regime got into India’s bad books for the close friendship that President Mahinda Rajapaksa had with the Chinese leadership. Perhaps to allay India’s fears of an annoying Chinese presence in its backyard, the current government is ready to fast track the signing of the controversial bilateral agreement ECTA.

Holmium Lanka, which has signed an agreement with Sri Lanka with regard to extractions for manufacturing cement , is up for sale subject to approval by the Cement Corporation and recently ran into flak for concealing important information from potential buyers. For example, the Secretary to the Ministry of Industries and Trade, T.M.K.B. Tennakoon, in a letter fired to Holcim in March pointed out that the deal needed to be re-negotiated since Holcim had made massive profits whereas the Treasury had received only a pittance in comparison.

Last modified on Friday, 08 July 2016 08:26