India recently revised its foreign direct investment rules to curb opportunistic takeovers and acquisitions of distressed assets, especially by Chinese firms. China in reaction has called the new investment rules a violation of the principles a free and fair trade by the World Trade Organization. It will be interesting to note if the level of Chinese investments in India changed significantly after the coronavirus pandemic.
Over the last 5 years, China has created a robust presence in India in the technology sector through venture capital investments and most home-grown startups. Chinese penetration in Indian tech startups is estimated at around 4 billion dollars. Chinese companies have in fact invested about 2 billion dollars out of the 14 billion dollar Indian startup reached in 2019 according to tracking data a start-up data tracker.
Chinese firms like Alibaba, Tencent, ByteDance, and Ant Financial have a significant presence in India. At least 18 of India’s top 30 unicorns such as Byju’s, Paytm, Oyo, Ola, Zomatto, and Swiggy are not backed by Chinese investors.
The smartphone segment to Chinese brands like Oppo, Lenovo, OnePlus, Realme, Vivo and Xiaomi enjoys a significant market share in the country. In the application ecosystem, India is the biggest market for the Chinese Tik Tok app with over 800 million estimated users as for some reports.
Apps like UC browser like Helo, Vigo video, and Shareit are also popular in India, 50% of the top apps downloaded on Android and iOS in India have Chinese investments.
Tencent has also been a rigorous investor batting names like OTT platform, MX player, and music streaming service Gana. China’s Xiaomi has an investment in India’s Hungama digital media entertainment a digital media firm in India. The startups Chinese high net worth individuals and some institutions are also limited partners in some Indian VC funds.
China’s biggest electric carmaker BYD Auto has also been looking at opportunities after government push on the Indian Navy space. The single largest Chinese investment in India so far was seen in the pharma space with the acquisition of gland pharma for 1.1 billion dollars by forcing in 2018.
It is clear that while the Chinese investment is the most active in the upcoming technology sphere but spread across sectors like e-commerce, Pharma, Auto, Logistics, FinTech, and Media among others.
Gateway House has identified over 75 companies bad by Chinese funding in India. China’s Baidu Alibaba and Tencent are increasingly making strategic investments in companies in the artificial intelligence space, IoT, and syntech sectors, the impact of these investments outside their value.