Yahoo! India (Calcutta) – The Nano may have been driven out of Bengal before it set up shop in Gujarat but a major Chinese company ‘ First Automotive Works (FAW) ‘ is considering both states as a possible location for its first plant in India.

The company currently has a tie-up with a Calcutta-based firm for selling automobile parts that are used in buses and trucks. But if it decides to set up a plant for manufacturing passenger cars, it will be a fully Chinese-owned company and not a joint venture, Zhang Lizhong, China’s consul-general in Calcutta, said.

“FAW is considering building an automobile factory in India and both Bengal and Gujarat are under consideration,” Zhang said.

Zhang is aware of the problems that dog acquisition of land for setting up industries in Bengal but added: “Land won’t be a problem. FAW’s current Indian partner has the land required for the plant.”

During an interview with The Telegraph, he, however, said that Chinese enterprises would be “prudent and cautious” about their future investment plans in the region in view of the “difficulties encountered in the past years”.

Despite these difficulties, some Chinese enterprises are seeking re-entry into this market and planning to set up offices in Calcutta. These enterprises are adopting “localisation strategies” in order to avoid the difficulties they faced in the past.

He mentioned Dongfang Electric Company Ltd, one of the leading Chinese manufacturers of power plant equipment, which sent a delegation to India recently. The company is said to be considering plans to set up a plant in India. It has already begun work on building a service centre in Rajarhat and hopes to complete it in two years.

Another major Chinese company ‘ the Aluminium Corporation of China ‘ is “re-entering” Bengal and choosing Calcutta as its Indian headquarters. The Chinese companies, however, want Bengal to improve investment conditions and facilitation in order to attract more investments.

Zhang, who has met Mamata Banerjee three times since she took over as chief minister, thinks she is “trying to do something” such as beautifying the city and cleaning up its streets. “Appearances matter to the Chinese,” he said.

Although bilateral trade between India and China has been expanding in recent years ‘ it amounted to $55.6 billion between January and October this year ‘ the global economic slowdown has had its toll on it during the current year.

But the trade ties are set to take a big leap under the new Chinese leadership. Zhang pointed to the political report adopted at the just-concluded 18th congress of the Communist Party of China, which places a greater importance on developing the “strategic and co-operative partnership” with India.

According to him, this is the first time that the political report adopted at a CPC congress says that China’s development should bring benefits to its neighbouring countries.

But what about political tensions between India and China over border and other disputes? Zhang is emphatic that India and China are “no threat to each other”. He does not agree with the suggestion that there has been little progress in the border talks.