Finance & Economy | News & Insights

Border conflicts with China likely to be the FDI roadblocks

Published: June 24, 2020
Author: munimji

The tightness and tension in a relationship following the recent border conflict between China and India are likely to restrict the Chinese investments in Indian startups and become the roadblock for FDI, stated by data and analytics company GlobalData. GlobalData made a statement that the Indian startup ecosystem has always witnessed the presence of Chinese investors over the last few years.

With the amended FDI regulation, companies heavily backed by Chinese investments are in a state of uncertainty for capital raising, GlobalData said in a statement.

Some start-ups that are backed by Chinese investors like Alibaba and Tencent include BYJU’s, Ola, Paytm, Zomato, Swiggy, Delhivery, Dream 11, Hike, MakeMyTrip, Oyo, Quikr, Snapdeal, Udaan, and Bigbasket.

“While the new law (FDI curbs) entails investments to be scrutinized and not necessarily stopped, this move is largely seen as a measure to curb Chinese investments and is likely to have a detrimental impact on start-up ecosystem for developing economies such as India given the fact that Chinese companies have traditionally been the lead investors in some of the key start-ups in India, which also enabled these start-ups to scale up,” GlobalData Lead Analyst Aurojyoti Bose said.

In April, the Department for Promotion of Industry and Internal Trade (DPIIT) had said a company or an individual from a country that shares land borders with India can invest in any sector here only after getting government approval.

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