China has always focused on growing its economy by investing its funds on growing business across the world. The strategy of investment in multiple sector of other countries creates economic dependencies. If we talk about China’s investment in India, since decades China has its eyes on the start-up companies, mobile gaming, healthcare, education, the financial sectors of India. So far Chinese investors have raised approx $4.6 only in the start-ups.

Gland Pharma by Fosun is the single largest Chinese investment in India for about $1.1 billion acquisition of  in the year 2018.

Change in India’s Foreign Direct Investment policy

Economy is the backbone of every nation. This backbone had a hard hit and seems to be weak in 2020. In the current scenario every country is struggling to get away with the pandemic COVID-19. Economy of such countries has become the topic of disquiet.

However, China on the other hand despite of all the accusation is trying to make most of this situation by investing in the share markets of the affected countries especially US and India.

Although India and China are the rivals of each other in terms market grabbing but appears that China is ready to misuse the adverse effect of the pandemic.

India was aware of the growing dependencies of China but one investment in month of march forced India to think on this seriously. It was observed when Chinese investors suddenly raised their stake in HDFC (Housing Development Finance Corp. Ltd) from 0.8% to 1.01% in the month of March. As a result India made changes in its FDI (Foreign Direct Investment) policy that no investment from the neighbouring countries should get automatic approval (including China).  

Currently, Singapore is the largest FDI investor in India. After coming in second to Mauritius for two years, Singapore regained top spot as India’s largest source of Foreign Direct Investment (FDI) in the 2018-19 financial year, which ended in March. For the last fiscal, USD 16.2 billion of foreign investment originated from the island republic

China’s investment in India- strategy

A recent report published by the Gateway House, a think tank associated with the Indian Council on Global Relations, estimates Chinese technology investment of $4.6 billion in Indian startups. 

54 Indian companies as per the one of the research are operating in China. They have presence across multiple industries such as manufacturing, healthcare and financial services.

Whereas among India’s top 30 unicorns (startups worth over $1 billion), 18 are already cornered by Chinese investors with major stake. A report published in February says 92 major startups are funded by China. 

Not only funding but also these start-ups are technology-driven by these funding agencies. According to the analysis, some large Chinese investing companies have their own ecosystems. Part of this ecosystem includes online stores, payment gateways, messaging services, etc.

Willingly they pull the Indian companies and start-ups into their ecosystem, leading loss of control over their customer’s and company data. Reluctantly Indian companies had to adhere to the guidelines of the ecosystem. 

Shareholding in India’s companies

China has set its root in Indian society, the economy, and the technology ecosystem that influences it.

There is a list of Indian companies such as Paytm, Paytm Bank, Snapdeal, Hike Messenger, Big Basket, Byju’s, Flipkart, Ola, MakeMyTrip, GoIbibo, Oyo, PolicyBazzar, Rivigo, Swiggy, Zomato etc. which are funded and majority of stake held by Chinese investors like Alibaba Group, Ant Financials (An Alibaba Group affiliate), Tencent Holdings, Ctrip, Meituan-Dianping, Didi Chuxing and China Lodging Group.

The catch here is companies like SoftBank Group(Japanese) and Napsters Ventures (South African) are not Chinese but has the largest shareholding in Chinese e-commerce giant Alibaba Group Holding Ltd. and Tencent Holdings.

Ant Financials (An Alibaba Group affiliate) owns approx. 49% of the share in Paytm and 23% in Zomato.

Tencent Holdings (owner of WeChat social messaging and mobile payment app) another Chinese giant invested and owns 20% in OLA, 12.5 in Hike Messenger 60% in MMT and GoIbibo group post merger and 10% in Byju’s in several rounds of funding.

On a similar pattern Didi Chuxing and China Lodging Group along with Softbank has combined ownership of 47%.

Indian Company	Total Value ($)	India’s Share (%)	Indian Shareholders	China’s Share (%)	Chinese Shareholders	Other Shareholders
Paytm	$16 billion	33.23%	Vijay Shekhar Sharma+ SAIF Partners	49.33%	Ant Financials (An Alibaba Group affiliate)	17.44%-Combined
Paytm Bank	$15 billion	51%	Vijay Shekhar Sharma	39%	One97 Communications	10%-Combined
Snapdeal	$6.5 billion	36.31%	Founders+B2 Professional Services	27.69%	Alibaba Group+ FIH Mobile Limited (subsidiary of Foxconn Technology Group)	36%-Combined
Hike Messenger	$1.4 billion	1.5%	Bharti Enterprises+ SoftBank Group	12.5%	Tencent Holdings	7.6%-Combined Rest-Undisclosed
Byju’s	$5.4 billion	10%	Aarin Capital + Sequoia Capital India	10.7%	Tencent Holdings+ Napsters Ventures	30%-Combined Rest-Unknown
Flipkart	$20 billion	4.2%	Binny Bansal	5.37%%	Steadview Capital+ Tencent Holdings	81.3%-Walmart 9%-Others
OLA	$10 billion	19.5%	Aggarwal and Bhati+ Venture capital firm Matrix Partners India	36.5%	Tencent Holdings+ Steadview Capital+ Sailing Capital+ Eternal Yield International Limited	46%-Combined
Make My Trip and GoIbibo  (post-merger)	3.8 billion	Not available	Not available	63%	Tencent Holdings+ Foxconn+Ctrip and Third-party investment entity	5.6%
Oyo	10 billion	20%	Ritesh Agarwal+ Hero Enterprises	47%	Didi Chuxing+ China Lodging Group+ Softbank	33%
PolicyBazzar	1.5 billion	23%	Info Edge+ Ajim Prem Ji	36%	Tencent+ Steadview Capital+ Soft Bank	31%
Rivigo	$1.05 billion	69.33%	Founders+ SAIF+ Others	10.48%	Unrevealed	20.19%
Swiggy	$3 billion	24%	Founders+ SAIF+ Others	9.4%	Meituan-Dianping	38.82% 27.78%-unknown
Zomato	$3 billion	46%	Info edge+ Deepinder Goyal+ Pankaj Chaddah (Cofounders)	23%	Ant Financials (An Alibaba Group affiliate)	31%