The Government’s decision to tweak the FDI policy to prevent opportunistic takeovers by the Chinese has got various Indian start-ups worried.
In 2019, Chinese investments into Indian startups were about USD 3.8 billion. This had increased by over USD 1.8 billion as compared to 2018 when the Chinese had invested USD 2 billion.
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Many of the Indian Startups such as Paytm, Ola, Flipkart have substantial Chinese investments.
Two Chinese firms: Alibaba and Tencent are involved in major ventures in India.
This FDI policy tweak has made many startups wary of attracting Chinese investments.
Initially, it was the US companies that were investing in startups in India. However, now it is the Chinese who have taken over.
According to an estimate, 18 out of the 23 unicorns in India have massive Chinese investments.
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The policy tweak on Saturday was done with the view to prevent Chinese opportunistic takeovers. Nations like Australia have already enacted similar laws to prevent the Chinese from entering their markets during times of distress.
The amended policy makes it compulsory for all FDI proposals from any nation sharing a land boundary with India to be routed through the government route as opposed to the automatic route.
The Chinese Embassy has described these norms to be violative of WTO norms.