Foreign direct investments (FDI) is always a source of external Capital for any country. FDIs generate greater revenue, making greater tax returns for the government – that ultimately improves financial infrastructure of any country. Because of Indo-China tension, Indian government showed some concerns about FDI, stating that government’s permission is required over all across border investments. This bordering tension raising a panic in startups ecosystems –affects some of the developing startups of India.

Indo-China trade relations before April 2020

India and China have had good trade relations for a very long time. India, a huge tech business market-one of the largest tech and internet end users in Asia. Due to which Chinese investors were immensely fascinated by tech startups of India. According to the Gateway House report Chinese investors have invested approximately $4 billion in Indian’s startups related to technology and other capital ventures.

Bordering tension impact on startups

Due to this Indo-China tension the immediate impact is visible in the business environment, putting a hold of future investments along with cancellation of consecutive projects. More than 59 Chines App or Chinese funded Apps are also banned in India is the giant setback for startup companies. Indian Startup companies need to prepare themselves for trade deficit, fund deficit and transactional issues. Big startup companies like Ola, Paytm Byju’s etc. have to seek new investors and alternatives otherwise they have to call off their mega projects.

Indo-China trade ban includes giant groups like Alibaba, Baidu, Tencent, Xiaomi and many big names. This ban destroyed a huge Chinese Apps user base of millions in India. Some of the names of Chinese or Chines funded Apps ban in India are:

  • Paytm
  • Byju’s
  • Dream 11
  • Zomato
  • Flipkart
  • Ola
  • Swiggy
  • Udaan
  • Mygate
  • Hungama
  • Rapido etc.

This is the alarming situation for business investments because India set a precedent of banning Chinese Apps. If the other markets of the world follow in the footsteps of India, it might be a dangerous thing ever happened. 

Chinese Alternative ways

China took some alternative ways to get into a game. They still invest in Indian startup companies via subsidiary establishments. A recent report of Gateway House revealed that Chinese companies route their investments through alternative offices located in Hong Kong, Singapore etc. Alibaba investments in Paytm are now re-routed through Alibaba Singapore Holdings Pvt. LTD.

Cover Photo by cottonbro

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