It is to be noted that there are many investment routes from China to India and hence the huge figure of investment remains hidden. Even if we rely only on government figures, FDI coming from China has increased five times in the last five years of Modi government compared to Manmohan Singh’s UPA government.
The figures of the Government of India, the Government of China and many think tanks regarding FDI coming from China to India are different. Rajiv Dubey, managing editor of Business Today, says, “The problem with FDI coming from China is that the government only gives figures for mainland China, while a lot of Chinese FDI comes through Hong Kong or Singapore.” The total FDI from China to India can be between 18 to 28 billion dollars.
It was claimed in the figures of the Chinese government itself that Chinese businessmen have invested $ 8 billion (about Rs 60,000 crore) in India. Many organizations give only the figures of China and many also include Hong Kong in it. According to the China Global Investment Tracker, Chinese companies have invested a total of $ 30.67 billion (about Rs 2.29 lakh crore) in India from 2005 to 2020.
According to the Brookings India report, the total investment (existing and planned) in India by Chinese companies is about Rs 1.98 lakh crore. Chinese companies have invested heavily in Indian startups. A report published by the Gateway House, a think tank associated with the Indian Council on Global Relations, estimates Chinese technical investment of $ 4 billion (about Rs 30,000 crore) in Indian startups. According to Gateway House, the total Chinese FDI in India is around $ 6.2 billion and their investment in Indian tech companies is about $ 4 billion.
Of India’s top 30 unicorns (startups worth over $ 1 billion), 18 are Chinese funded and technology driven. Around 100 Chinese companies are doing business in many sectors of India.
FDI in Dr Manmohan vs Modi rule
Whether the UPA government led by Manmohan Singh or the NDA government led by Narendra Modi. According to data from the Department of Industry Promotion and Internal Trade (DIPP), FDI from China to India between 2000 and March 2014 was just $ 402 million (as of 2004 it was around $ 2 million). If we look at the figure of $ 2.4 billion in 2019-20, then there has been an increase of about 2 billion dollars i.e. about 15 thousand crore rupees.
Significant Chinese investment
The leading Chinese firms involved in Indian businesses through strategic investments are Alibaba, Tencent and ByteDance. The Alibaba Group alone has made strategic investments in Big Basket ($ 250 million), Paytm.com ($ 400 million), Paytm Mall ($ 150 million), Zomato ($ 200 million) and Snapdeal ($ 700 million).
Similarly, another Chinese conglomerate Tencent Holdings has entered into Indian companies such as Biju ($ 50 million), Dream 11 ($ 150 million), Flipkart ($ 300 million), Hike Messenger ($ 150 million), Ola ($ 500 million) and Has invested in Swiggy ($ 500 million).
Multiple investment avenues
The Gateway House report states that some Chinese funds make their investments in India through offices located in Singapore, Hong Kong, Mauritius etc. For example, Alibaba’s investment in Paytm has been done by Alibaba Singapore Holdings Private Limited. It is not recorded as a Chinese investment in India’s government data.
Many Chinese investors like Xiaomi are investing in India through Singapore, due to which they avoid coming in the figure of Chinese FDI. Xiaomi has invested around Rs 3500 crore through this route.
Experts say that a large part of the increasing FDI investment in Singapore and Hong Kong may be due to Chinese investment. In the last 20 years, there has been an investment of about $ 94.6 billion from Singapore in India, which is about 20 percent of India’s total FDI. During this time, investment of about $ 4.2 billion came from Hong Kong.
Chinese investment in stock market is also under watch
Chinese institutional investors have invested over $ 1 billion in the Indian stock market through portfolio investment. Foreign institutional investors of China can also invest in the Indian stock market.
According to the rule, Chinese companies can invest up to 10 percent in a company listed on the Indian stock market. FDI is regulated by the Ministry of Finance, but foreign portfolio investment is regulated by SEBI. According to an estimate, 16 Chinese portfolio investors have invested around $ 1.1 billion (about Rs 8000 crore) in the Indian stock market.
Recently, the market regulator Sebi had asked the stock market custodian to monitor whether the Chinese companies were buying the shares of Indian companies at the suppressed value. SEBI asked not only China but also 11 Asian countries including Hong Kong to monitor the investment. SEBI asked for information that it is not so that the funds of these 13 countries are investing in Indian stock market, most of them have money from Chinese investors.