The Chinese spell

After uninstalling TikTok to save Indian soldiers on the border, if you bragged to your friend about your support to India’s ‘vocal for local’ movement, then joke’s on you. Because, you probably texted your friend on your smartphone, most likely a Chinese brand. After all, more than 72% of the Indian smartphone market share is held by brands such as Xiaomi, Vivo, Realme and Oppo. Now, you feel guilty. You want to make a switch. So, you try to look for new smartphone options on Flipkart or Snapdeal. But, guess what. Those shopping platforms are backed by Chinese investors Alibaba and Tencent. Nevertheless, worry not. Take a deep breath. Maybe, some good food can cheer you up. However, Zomato and Swiggy are also funded by Chinese investors. You see the pattern, right?

According to a report by Mumbai-based think tank Gateway House, Chinese tech investors have brought an estimated $4 billion into 92 Indian start-ups, and as of March 2020, 18 of India’s 30 unicorns were Chinese-funded. There are three reasons behind China’s deep penetration into India’s online ecosystem, states the report. First, there are no major Indian venture investors like Sequoia or Google. Second, China is capable of providing the patient capital of $100-million commitments needed to finance start-ups through their early losses. Third, the huge Indian market has both retail and strategic value for the dragon nation.

The aggressive funding can be traced back to the time when India refused to endorse China’s Belt and Road initiative. “India may have sidestepped the physical corridor, but has unwittingly signed up for the virtual corridor,” mentions the report. While major investments have been in e-commerce and fintech space till now, moving like clockwork, China has spotted another early opportunity in India – the potential shift to electric mobility. And, Chinese automakers have already invested $575 million.

With this sea of investments, come several backend implications as well. As per the report, data security can be compromised if Indian start-ups used pre-existing Chinese tech solutions. And more critically, the Chinese government can push its narrative in bilateral issues. In April, to curb “opportunistic takeovers/acquisitions” of domestic firms, Department for Promotion of Industry and Internal Trade (DPIIT) made prior approval of Indian Government mandatory for direct or indirect foreign investments from countries that share a land border with India. Understandably, China was seething. It complained that the “additional barriers” violated WTO’s non-discrimination policies.

Now, it remains to be seen how ‘Make in India’ initiative pans out with restricted Chinese backing. Till then, you should probably pray to the Gods for India’s well-being. But, wait. Before you light that incense stick, you should know that reportedly around Rs.800-crore worth of incense sticks was imported from countries including China and Vietnam in 2018. So, there is a good chance that you are lighting a Chinese agarbatti for your prayer.