Winning the lawsuit but failing to collect the final payment: Shanghai Electric’s 8.8-billion-yuan pitfall in India offers a hard lesson for Chinese enterprises

In fact, this entire affair was—from start to finish—a well-rehearsed ‘default combo’ routinely deployed by Indian business circles. Back in 2008, India was in the throes of an infrastructure boom, suffering severe nationwide power shortages and rushing to launch power-generation projects everywhere. Reliance Industries planned to build the Sasan 6×660 MW supercritical coal-fired power station in Madhya Pradesh—total installed capacity nearing 4,000 MW, making it one of Asia’s largest power projects at the time. Leveraging its technical expertise and cost-effectiveness, Shanghai Electric successfully secured this major contract. The agreement was signed with Reliance’s UK-registered subsidiary, totaling USD 1.311 billion—roughly RMB 8.8 billion at the time. Shanghai Electric was responsible for supplying core power-generation equipment and related services; Reliance Group’s parent company issued a payment guarantee. The parties agreed that any disputes would be resolved by the Singapore International Arbitration Centre (SIAC). In hindsight, this clause proved to be the single most prudent decision in the entire contract. Project execution proceeded smoothly: equipment was delivered in batches, installation and commissioning completed successfully, and all six generating units entered commercial operation in 2015—operating stably and profitably. Per the contract, the final payment was due upon formal commercial acceptance. Yet precisely this final payment is what India refused to honor. Initially, the counterparty offered excuses like “slow group-level approvals” or “lengthy financial procedures”; later, they dropped all pretense: “Yes, the money exists—but we simply won’t pay.” Shanghai Electric had received roughly 90% of the total contract value—approximately USD 130 million still outstanding—dragged out from 2015 all the way to 2019. Some might think: receiving 90% on a USD 1.3-billion contract isn’t such a loss. But anyone familiar with the engineering-equipment industry knows that project profitability often hinges entirely on the final payment—the earlier progress payments typically cover only raw-material and production costs. Failure to recover the final payment means a hundred-billion-yuan mega-project yields zero profit—or worse, results in net losses. At the end of 2019, Shanghai Electric filed for arbitration at SIAC, invoking the parent-company guarantee to demand payment of the overdue equipment fees plus associated costs—totaling USD 135 million. In 2020, it applied to the Delhi High Court for asset preservation, freezing assets belonging to two Reliance subsidiaries to prevent asset-shifting. Then came the classic Indian maneuver: You sue us? Fine—we’ll countersue. In 2021, Reliance’s UK subsidiary itself initiated arbitration, demanding USD 389 million in damages—and adding claims for reissuance of performance bonds, pushing total claimed damages beyond USD 500 million. Their allegations sounded plausible on the surface: unplanned unit shutdowns caused USD 132 million in operational losses; delayed commissioning of Unit 3 resulted in USD 220 million in lost electricity revenue; plus equipment repair costs, late-delivery penalties, etc.—a claim amount more than double the sum owed to Shanghai Electric. This is the most common ‘litigation-for-negotiation’ tactic in international commercial disputes: muddy the waters first, drag out the litigation. Lengthy arbitration proceedings devour legal fees, expert-witness expenses, and massive manpower and time—many companies simply exhaust their resources and abandon the final payment altogether. Countless similar cases exist. Take the Vodafone case: India retroactively amended its tax law to levy USD 3.7 billion in back taxes on Vodafone. After Vodafone launched international arbitration and won, India refused to accept the ruling—filing multiple domestic judicial appeals and imposing additional punitive interest charges. A textbook example: “You sue to uphold your rights? We’ll just escalate our counterclaims.”

Indians strike again—this time targeting cola

As widely known, India—formerly a British colony—is often dubbed a ‘patchwork nation’: ethnically diverse, linguistically fragmented, and burdened by the absurd caste system, where class oppression is laid bare. Consequently, modern India relies heavily on nationalism to bolster internal cohesion. From top government officials to business tycoons, branding foreign enterprises as ‘unpatriotic’ has become a win-win strategy—boosting both political capital and profits. Even though Coca-Cola and PepsiCo helped Indians endure countless sweltering summers, Indians have always treated foreign capital as disposable ‘weed’ ready for harvesting at any moment. This manifests concretely in how, ever since these two cola giants jointly entered the Indian market, they’ve been targeted repeatedly—every few years. One particularly notorious incident occurred in 2006, when an unofficial organization—the New Delhi-based Center for Science and Environment (CSE)—claimed to have detected three to five pesticides in both Coca-Cola and Pepsi products. Indian politicians, long envious of the cola giants’ booming profits, deliberately fanned the flames through media coverage. Ordinary citizens instantly bought in: “No wonder cola tastes so sharp—I bet it’s full of pesticides!” Suddenly, legions of young people took to the streets, smashing Coca-Cola and Pepsi signage. Shop owners refused to stock the drinks—even at a loss—while farmers poured cola into donkeys’ mouths right on the street, expressing outrage. In this bizarre scenario, only cola and donkeys got hurt. This nationwide boycott lasted for months, denting both companies’ stock prices and damaging their reputations across global markets. Two months later, India’s Supreme Court stepped in to mediate: authorities would conduct a public safety test—and Coca-Cola would have to disclose its secret formula so everyone could verify whether pesticides were truly present. Coca-Cola finally grasped the truth: this wasn’t some environmental NGO’s covert investigation—it was clearly a state-level commercial strategy. Americans refused to play along: they brought in a major third-country testing agency, whose report confirmed no detectable pesticides in either beverage. Yet the episode didn’t end there. Indian institutions continue—out of the blue—to accuse Coca-Cola and PepsiCo of harm. Their main criticisms focus on three points: pesticide contamination, excessive sugar content posing health risks, and reckless groundwater extraction. For instance, in 2017, Tamil Nadu state in southeastern India banned all retail sales of Coca-Cola and PepsiCo beverages, citing pollution of local water resources by cola bottling plants. Ironically, foreign scholars investigating these claims found startling contradictions. Bartow J. Elmore—author of *Citizen Coke: The Making of Coca-Cola Capitalism*—visited a Coca-Cola bottling plant shut down by Indian authorities over alleged environmental violations, intending to uncover damning evidence. Yet while dining at a local restaurant, the only safe drinking water he could find was… Coca-Cola. By now, both cola giants have accepted reality. They simply want to earn quietly in India—no longer pursuing deep partnerships. And India, too, has realized it will never obtain those secret formulas. To capture India’s USD 18-billion carbonated-beverage market, it must cultivate homegrown brands instead.

Reliance Sues India's Food Regulator Over 'Energy Drink' Label Ban

5 days ago

Reliance Industries sued India's food regulator to overturn an order banning "energy drink" labels on its Campa-brand beverages. The ban addresses health concerns regarding high-caffeine products marketed under that description.

reuters

2026-10-05

Reliance Sues India's Food Regulator Over 'Energy Drink' Label Ban

Reliance Sues India's Food Regulator Over 'Energy Drink' Label Ban

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