Such investments have mostly taken the route of Foreign Direct Investment.

 

New Delhi: Chinese investments are deep-rooted in the Indian economy with $6.2 billion of Chinese money in the Indian economy in myriad sectors, including Indian startups, tech companies, smartphones and applications (apps).

Chinese investments in India have mostly taken the route of Foreign Direct Investment, with investments in over 88 projects in India’s IT and electronics sector between 2015 and 2019.

In 2019 alone, Chinese companies invested in about 19 projects from the IT and electronics sector in India, according to The Financial Times’ foreign investment monitor “fDi markets”.

According to the Ministry of Corporate Affairs’ “Invest India data”, Chinese IT and tech companies like Xiaomi, Oppo, Vivo, and Huawei have secured 100% FDI in contract manufacturing in India and have set up plants in Greater Noida, Andhra Pradesh and Tamil Nadu, while Chinese auto companies like MG motors, BYD auto, Colsight, YAPP Automobiles, among others, have been some of the companies that have grown quite fast in India over the last few years.

According to the Ministry of Commerce, Chinese auto giant BYD Motors has been the biggest beneficiary of the government’s FAME scheme for supplying electric buses to state governments.

The Indian startup sector has some of the biggest investments from Chinese companies. Chinese investment giants like Alibaba group, Tencent, Steadview Capital and Didi Chuxing dominate investments in over 18 of the 30 Unicorn companies in India. These 18 Unicorn companies in India have over $3,500 million of Chinese investments.

Unicorn companies like Bigbasket, Zomato, Delhivery, Byju’s Flipkart, Make my trip, Paytm, Policy Bazaar, Swiggy, among others, have millions of dollars in Chinese investments.

For example, Zomato has over $200 million of Chinese investment by the Alibaba group, while the same Alibaba group has invested more than $200 million of Chinese money into India’s leading online grocer Big Basket. The Tencent Holdings, on the other hand, have invested over $50 million into the tech learning startup Byju’s. The same Tencent Holdings, along with Steadview Capital, both Chinese investors, also has over $500 million investment in India’s first ever online cab aggregator Ola.

The most popular online transaction application Paytm and Paytm Mall owned by one97 communication and Paytm E-Commerce Pvt. Ltd. has over $550 million of investment by the Alibaba group.

According to Gateway House, a foreign policy think tank which has compiled these data, China is seeing much success in the Indian tech startups since the Indian startup market relies disproportionately on overseas venture capital (VC) funding and all startups worth over $1 billion are foreign-funded. Some like Flipkart and Paytm have been acquired outright. India still does not have a Sequoia or Google of its own. Reliance Industries, through Jio, is trying to replicate Alibaba’s successful model in India.

The smartphone market in India has one of the deepest Chinese penetration and according to several reports, Chinese smartphones dominate over 70% of the Indian smartphone market.

Chinese smartphone companies like Vivo, Oppo, Oneplus, Xiaomi and Realme are the leading smartphone brands in India. In 2019, Xiaomi alone dominated over 27-28% of the Indian smartphone market, while Vivo and Oppo dominated over 15-17% of the smartphone market in India.

The internet consumer sector is also dominated by Chinese investments and companies in India. According to the Gateway House research, more than 50% of the app downloads in India, include those apps that have Chinese investments. Apps like Tiktok, Vigo Video, ShareIt, Cam scanner are some of the most downloaded apps in India and these apps have been developed by companies owned by Chinese investors.

The optical fibre sector has also seen significant Chinese investments over the last few years and Chinese companies like Fiberhome, ZIT, TG Advait, and Hengtong have made huge investments in India. The Government of India has also last year allowed Chinese tech giant Huawei to conduct 5G trials in India.

However, following a bloody clash at the Indo-China border where the Chinese PLA has killed 20 of India’s soldiers, sources in the Ministry of Commerce have indicated that the Ministry and the Government of India would be re-looking into Chinese investments in India.

“We will be re-looking into Chinese investments in India and we have noticed that most of these companies that have invested in India have put influential people like lawyers, next of kin of judges, and politicians into their board of directors so that no harm is done to them. All these factors will be looked into,” a source in the Ministry of Commerce told this correspondent.