This, in a sense, confirmed what the government had feared when it tightened the FDI norms in April—“opportunistic acquisitions” by the cash-rich Chinese of domestic firms that saw a massive crash in valuations after the Covid-19 pandemic.
About 120-130 foreign direct investment (FDI) proposals worth around Rs 12,000-13,000 crore ($1.6-1.8 billion) from China are pending with the government for clearance, a source told FE. This follows India’s stipulation in April that FDI proposals from bordering nations must obtain government approval.
Interestingly, these pending proposals in less than nine months are equivalent of more than a half of the total FDI inflows from China ($2.4 billion) in 20 years through March 2020. FDI from China was merely 0.5% of total FDI inflows into India over the past two decades. Unsurprisngly, most of the current pending proposals are for brownfield projects.
This, in a sense, confirmed what the government had feared when it tightened the FDI norms in April—“opportunistic acquisitions” by the cash-rich Chinese of domestic firms that saw a massive crash in valuations after the Covid-19 pandemic. Certain Chinese companies have also applied for registration for bidding in official contracts here. These proposals have been forwarded to the home ministry for its views. However, there is no bar on Chinese companies for bidding for projects that are funded by multilateral institutions, the source confirmed.
A senior government official said: “Some FDI proposals had incomplete paperwork, so the applicants were asked to complete it. The usual process that involves the official scrutiny of the FDI proposals is being followed here as well.” An inter-ministerial panel has been set up to scrutinise these proposals. A Chinese embassy spokesperson in Delhi had in late April said his country’s cumulative investments (including FDI) in India exceeded $8 billion as of December 2019.
Also, according to a recent report by researchers Amit Bhandari and Aashna Agarwal, Chinese tech investors have put an estimated $4 billion into Indian start-ups. Over the five years ending March 2020, 18 of India’s 30 unicorns are now Chinese-funded. “TikTok, the video app, has 200 million subscribers and has overtaken YouTube in India. Alibaba, Tencent and ByteDance rival the US penetration of Facebook, Amazon and Google in India. Chinese smart phones like Oppo and Xiaomi lead the Indian market with an estimated 72% share, leaving Samsung and Apple behind,” said the report.