Indian startups are dependent on Chinese investment.

How Indian startups are dependent on Chinese investment

How Indian startups are dependent on Chinese investment. Different major Indian startups with Chinese investment. How to boycott china affects these

Recently, 20 Indian soldiers died in a fight with Chinese soldiers because of a dispute on a border site in the Himalayan Galwan Valley. Several people across the country came on roads to protest against China by demanding a boycott of Chinese material. The first protest was started in the western Indian city of Ahmedabad, people came in balconies and hurled Chinese TV sets down their balconies, while some traders in Delhi, protested by burning Chinese goods.

Soon a minister called a boycott of restaurants who were selling Chinese food, Chinese cuisine is quite popular in India. Then an opposition leader blackened a billboard which was containing an advertisement of Chinese smartphone maker Oppo. Many people across major cities in India burned the poster of North Korean leader Kim Jong-un, mistaking him for Chinese President, Xi Jinping.

The Indian government announced the boycott of Chinese apps, however, still hasn’t announced a boycott of Chinese material but from the beginning, they were promoting Indian goods and were telling people to support locals so that India can become a reliant country. The Indian railways had cancelled a project which was signed to a Chinese company in 2016. As per reports, the government has always asked e-commerce companies to display the country of origin of all the products before selling them.

How much India is Dependent on Chinese Products?

Well, India has been heavily dependent on Chinese products in case of goods and services for a very long time. As per sources, at least three-fourths of goods are imported from China every year and there are innumerable goods of daily use that are made by Indian companies, but still, somewhere they are dependent heavily on Chinese inputs.

Examples of Chinese products can be seen in our daily lives, for instance, people prefer and buy an India-made LED bulb to reduce power consumption, but people might don’t know that almost 30-40 per cent of its parts or any small elements are imported from China. In the case of medicine, most drugs that are bought to convert them into pills in India are imported from China, in that, at least two-thirds of the active pharmaceutical ingredients are from China.

Most of the things that we are using on a daily basis in the case of technology, food, ingredients, toys, clothes or many more are imported from China. Many people don’t know the names of things that they rhino are Indian, but they are somewhere imported from china.

So, even if we India faces a military standoff with China, it will be quite difficult impractically to boycott everything that’s made there and there is nothing shameful to think of the consequences before making any decision about it. It’s not that we don’t have to boycott them, but instead of directly boycotting them, we should have a proper backup or we can say an alternative to using instead of Chinese products so that people cannot face any problem during this campaign.

Massive Growth of Chinese Investment in India

Chinese investments is almost a very complex matter in the case of India. As per resources and some reports, it was estimated that Chinese investments in India are quite high as it almost cost to $1.6 billion till 2014, the year when Narendra Modi became PM of India. In the next three years since 2014, the amount grew to five-fold that is almost $ 8 billion.

The Chinese companies were either already made an investment In India or they had planned to invest more and more in the coming few years. The first Chinese company that was set in India were heavy equipment makers Sany & Liugong. Sany is running a plant in Maharashtra’s Chakan since 2010 and Liugong built a factory in Pitampura in Madhya Pradesh and now they have a well-established business in India.

Some of the Major Chinese steel companies have big plants in India and majority of these power companies in India are using China-made power-equipment, and TBEA is one of the biggest equipment exporters in India and they had also set up a China-dedicated industrial park in Gujarat.

Major Chinese companies including Lany, Longi Solar & CETC are almost investing $3.2 billion in renewable energy in India. Some of them have also entered into auto, real estate and several other sectors to expand their business and dependency.

So we can say that many products which are sold by Chinese companies are actually made in India. For instance, one of China’s overwhelming presence in India’s mobile-phone market, there are almost four out of the top five brands are Chinese. If we talk about one of them that is Xiaomi, is now a market leader, it is having seven factories in India, and is planning to invest more than $ 500 million to expand its retail presence Indian phone market.

Chinese Investment in Indian Startups

In Indian companies, Chinese capital is also making big-equity acquisitions. Hundreds of Indian startups are getting investments from Chinese finance companies including Alibaba & Tencent. Alibaba in today’s time is owning most of PayTM. Currently, Alibaba company has made big investments in the e-commerce company including Snapdeal, the food delivery app Zomato and many other companies. The company is also planning to do equity investments in the entertainment and media space sector.

Alibaba’s biggest rival Tencent has nearly 10 per cent stake in our India’s cab aggregator, Ola. Tencent has also made equity investments in major companies including Flipkart, Byju’s, Practo, Swiggy, and Gaana. Xiaomi is also a diversified outside mobile phone into picking up stakes in over a hundred Indian startups along with its sister investment firm Shunwei.

Most of these investments have taken place during PM Modi’s rule since 2014. If we take any action against Chinese companies by boycotting them then it will jeopardise a large part of India’s startup ecosystem. Similarly, it will make the lives of Chinese manufacturers in India very difficult because most of them will cost jobs and affect supplies of crucial heavy equipment and electronic goods and without them, it will be impossible to bring modern economy any hope to function.

Is self-reliance the answer?

Now the question arises, in this case, is self-reliance will be the only way to solve this problem. As per reports, India’s major domestic manufacturing sector can substitute as much as 25 per cent of total imports from China. It would lead to a reduced import bill of over $8 billion in a one year.

Handicrafts, as an example, can be categorized where India imported $431m worth of products from China within the 2020 fiscal year with none significant reciprocal exports.

But Mr Bhandari of Gateway House says that by boycotting popular Chinese apps like TikTok will be much simpler than boycotting physical goods because there are multiple alternatives. But from India’s standpoint, none of this is often likely to play out without grave consequences to the economy, especially during a severe downturn. China, on the opposite hand, is a smaller amount concerned since India accounts for less than 3% of its exports.

Beijing has started giving restrain in its reaction to the ongoing backlash in India on the boycott of Chinese goods. But a recent op-ed within the daily Global Times warned that “China’s restraint isn’t weak”. It says it might “be extremely dangerous for India to permit anti-China groups to stir popular opinion, thus escalating tensions”, and adds that the main target should instead get on “economic recovery”.