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How big is the Chinese presence in India?
China dominates our lives in unimaginable ways. The Gateway House think tank says that during the period from April 2015 to March 2020, of the 30 Indian unicorns (companies valued at more than $ 1 billion), 18 were funded by Chinese companies. ByteDance’s TikTok for Alibaba’s UC browser, Diwali lamp-lighting cookies are all Chinese. This includes various mobile and financial technology companies. Chinese exports of toys, steel, aluminum, glass, chemicals, and bulk medicines have hurt Indian producers. China also tops the list of countries against which India is investigating dumping cases, all sectors combined.
How do Chinese companies invest in our country?
There are two instruments for foreign investment. Foreign direct investment (FDI) is more stable and strategic. Companies that provide FDI make long-term commitments, unlike foreign portfolio investments (FPIs) made in the stock market mainly to obtain financial returns. The department of the Ministry of Commerce for the promotion of industry and internal trade regulates FDI; The Securities and Exchange Board of India (Sebi) under the Ministry of Finance oversees the FPIs. Sixteen Chinese foreign portfolio investors are registered in India, with $ 1.1 billion invested in blue chip stocks. Chinese FDI in India is still small, at $ 6.2 billion, says Gateway.
How does India regulate foreign investment?
With the sights set on China, the Center has removed FDI from neighbors from the automatic list. Previously, except in Pakistan and Bangladesh, investments from no neighboring country required the Center’s approval. That has now changed. Sebi is asking trustees to provide details of the portfolio investments originating in 13 jurisdictions, including China and Hong Kong.
Is such aggressive scrutiny warranted?
So it seems. The second largest economy in the world has deep pockets. India’s suspicion of China stems from the 1962 war they both fought, the Doklam showdown in 2017 being their latest confrontation. China provides financial and military aid to Pakistan and occupies part of the country. Central banks have unlimited resources and their participation purchases cannot be compared to those of another entity. The People’s Bank of China participating in HDFC should be treated differently, as a financial company is systemically important to the banking sector.
What other concerns are there about China?
Alibaba, ByteDance and Tencent have a strong presence in the Indian startup ecosystem. Smartphone makers Xiaomi and Vivo, the TikTok and UC Browser platforms have access to data from millions of users in real time. The concern is that this data could land with the Chinese authorities. But India should not shy away from Chinese investments. There should be more scrutiny, but not exaggeration. China has provided quality and service and leads the electrical and green technologies. India would do well to encourage everything that comes here.
