MUMBAI METRO LEAKS - HAIL 'MADE IN CHINA'!
By Ruma Dubey
A simple question – Would you buy a Chinese car because it is the cheapest model in the market?
Majority would vehemently say, “no”. We are using Chinese products in our day-to-day life and when the quality of those trivial items itself is a suspect, how can one risk one’s life?
Thus it comes as rude shock to know that Mumbai’s metro, which was inaugurated with so much fanfare, with people queuing up for just a ride , touted to be so very state-of-art is today an object of ridicule. The joke going around – are you carrying an umbrella for your metro ride? Or take a water park ride in Mumabi metro? Or go to Mumbai Metro for a rain dance! Some even called it metro's humble attempt at 'rain water harvesting' when rest of the city could not do it!
It rained heavily in Mumbai on Wednesday and the not-even-a-month old Mumbai Metro was leaking from its roof! The metro authorities clarified – it was not rains which leaked through the roof but a faulty air-conditioning system which after the downpour started giving out rain water instead of fresh air from the air-conditioning system! This is worse than leaky roofs!
Of course the metros are made in China and that, in a nutshell to many of us city dwellers explained all. We all also know that Chinese good are cheap because they are mass produced yet they have no control on quality. And this is what they call state-of-the-art?
Buying small day-to-day items which are harmless and do not cost much are fine as you can replace when the quality deteriorates. But what about big ticket items like an air conditioner or on a macro level, electric trains and power equipments? That apart, plagiarism and blatant imitation of best of the brands across the world has made protection of intellectual rights a problematic issue with China.
This order for the Metro was placed despite the crash of its bullet train manufactured by the Chinese for the Chinese. It drew flak from all over the world as the crash was caused due to its flawed design and poor management. When the train was launched, it was done so with a lot of fanfare and the Chinese made sure that the whole world knew about it. It was a moment of national pride. It was stated to be a rail system faster and more advanced than any other; it made technology giants like Germany and Japan sit up and take notice when China said that it was a superior technology. Though it did not sound convincing given its track record when it came to quality, one did wonder for a moment as to where China headed. But the crash brought it all back to square one. It was like a ‘I-told-you-so’ kind of moment.
The high-speed rail network was in fact built with imported components and its circuitry system was tailor-made by Hitachi Ltd. of Japan. Hitachi, fearful of China stealing the technology, sold components with the inner workings concealed, and whatever was revealed was harder to copy, and also harder to understand. Yet, the train crashed and yet, Mumbai Metro went and placed the order with China. The other cities – Delhi, Jaipur and Bangalore would be having the last laugh as their Metro’s run snag free and it is home made by BEML, which says it runs 2-3 tests for leakages.
So why did Ambani go and place the order with China? There could be two reasons for this – cheaper products and secondly, cheap loans. Anil Ambani is hugely ‘indebted’ to Chinese banks – literally. Anil Ambani, in the real sense, started the trend – he was amongst the first to borrow huge money from China, not once but twice. The first time was in 2011 when Ambani needed $1.9 billion to fund his 3G needs for Rcom. The loan came underwritten from China Development Bank and it was recorded as the largest financing in the history of India’s telecom sector. And then for the second time, RBI approved refinancing of its FCCBs worth $1.18 billion through a consortium of Chinese banks; once again the largest refinancing ever. But China is killing two birds with one stone – not only is it getting borrowers, but the funding is linked with conditionality of equipment purchase, meaning direct boost to exports. The $1.18 billion loan for Anil Ambani was approved on the understanding that Reliance would buy Chinese telecoms equipment from Huawei Technologies and ZTE Corp. Though this does not come as a “mandatory” rule to getting loans, it comes with a tacit understanding that Chinese banks would only lend to Indian companies if tied to future procurement orders. Yes, these loans are indeed cheaper than Indian loans and do help in savings but the tie-up with supply of equipments is a huge risk. One wonders why China did not offer to bail out Kingfisher Airlines for some quid pro quo arrangement – it could have gained a foothold in the aviation sector!
When this is the perception about Chinese goods, even at the grass root level, we could not help but wonder why 39,570 MW orders for equipment supplies, of the total 93,084 MW capacity expected to come up in India during the 12th Plan, has been given to Chinese companies. This is 42.5% of the total equipment order. As against this, less than 40% of the order, has gone to BHEL. The demand is so high that the Chinese companies are scaling capacities - Dongfang in China is increasing its capacity from 37 GW to 42 GW, making it the largest power equipment manufacturer in China and possibly in the world. And by packaging the deal with cheap finance, China is making very deep but dangerous inroads into the Indian power sector.