Sanjeevni Today

Foreign Investors Move in as Chinese Fade Away

Sanjeevni Today 12-12-2020 09:58 AM

Indian technological companies and digital markets have grown increasingly attractive to foreign investment, despite a difficult year globally. While Chinese tech giants used to give the main impulse to the IT market over the past few years, that may not be the case anymore.

Indian Tech Companies Proving Independence from Chinese Giants’ Financing

Industry reports seem to have little doubt: Chinese money seems to become less of a factor in Indian digital growth as foreign investors compete for a pie of the desi IT market.

Still, the changing picture of the tech ecosystem financing is not due to the Chinese withdrawing from their assets. They continue owning and supporting a multitude of financial technology, online services and entertainment sectors in the country. Alibaba, Tencent and Tiger global have significant shares or even determine the management policy of online fintech and payment providers (e.g. Paytm, PhonePe). Xiaomi, BBQ Electronics, Huawei and many others own smartphone facilities which have turned India into the second largest global producer.

Others (or a combination of the above players) have heavy investment in online entertainment arms (Paytm First Games is a prime example), as gaming continues growing exponentially during lockdown as a form of accessible entertainment. In fact, while Chinese foreign direct investment (FDI) used to be spread out more or less, the majority went towards services and the digital sector.

However, all this began to change over the past year. As spring lockdown had hundreds of millions of Indians staying at home, online entertainment traffic saw gambling online increasing in India and, more importantly, directed towards foreign offshore gaming platforms and global casinos such as 10Cric.. Local development companies began supplying those same foreign operators with original desi content and attracting investment for their work in digital entertainment by investors which were not there before.

Border Tensions Reflected in FDI Levels

Realistically speaking, there was another event which gave further push to such an evolution in business relations, and the coronavirus had nothing to do with it. Border tensions with China on the Line of Actual Control (LAC) in the summer led to the Government responding not only on the field but also in market access terms and conditions. It banned more than 100 leading Chinese Apps and digital services, including Tik Tok, Baidu, top performing mobile games and some virtual private networks (VPNs). Some Indian users complained but the measures were largely understood and appreciated.

Then came the new FDI policy aiming to prevent hostile takeovers of Indian companies by Chinese ones, limiting investment shares and aggravating further certain business relations. Fortunately, this has not affected the IT sector, as it has proven mature and competitive enough to warrant continuous investment from other foreign partner countries.


Their growing trend is illustrated by the American companies reaching USD 40 billion in FDI this year alone, reflecting a growing confidence in the country’s tech companies. Singapore also remains an important financing source, as do many European countries, reports in October 2020 have shown.

India’s young and tech-savvy population has been a defining factor in establishing a thriving and mature entrepreneurial ecosystem. It continues being highly valued by the country’s foreign partners – tech giants Facebook and Google began partnering Mukesh Ambani’s Reliance Industries; first-time investors bet on smaller desi tech companies such as Oga Fit; and Silicon Valley business angels test the waters with other unknown Indian startups that strive for their place in the sun. It is all seen by digital industry experts as a natural progression as India boasts a huge internet user base, expected to reach 1 billion over the next 5 years.

More From Business

Trending Now