Foreign Direct Investment or FDI is a symbiotic relationship between foreign investors and local corporations. Most startups are not capital intensive and hence foreign investors fuel their growth in the competitive markets. The investors buy a dominant proportion of stocks in these corporations and expand their market by quickly acquiring upcoming strategies, equipment, technology, capital, and new products. They have also used such an opportunity to dump their products in our emerging markets.
China has always been in the top 20 foreign investors in India. The Department for Promotion of Industry And Internal Trade quoted China to have invested US $2.38 billion, since March 2000.China not only captured a section of the consumer base in India but also dominated its market in both the strata of our dual economy.
India has a dual economic system which essentially means the existence of two separate economic sectors divided by different levels of income, education, and technology. Let us classify them as the lower economic group and the higher economic group. Chinese investors have maneuvered their way to both the groups by catering to their demands at a relatively cheaper cost.Xiaomi, Oppo, One Plus, Huawei, Vivo, Lenovo, and many other Chinese mobile phone companies have dominated the Indian market and this sector is highly dependent on Chinese products since we lack indigenous productions which could be at par with the market competition.
Technology dominates lifestyle in urban areas, from food, clothing, daily essentials to payment portals. Chinese applications like SHAREit, PUBG mobile, Tik Tok, Shein, UC Browser are amongst the top software applications used in India. India surpassed the number of Chinese downloads of TikTok by 293.6 million, which means they earned thrice the revenue from India than it earned from China. The Tik Tok app uses the SIM region code to trace its users, one cannot avert it by using any VPN. Can you imagine the extent of data points the firm has stored in reference to its customer base? The possession of these data points by China is a threat to Indian democracy. One should take lessons from the Cambridge Analytica, where data points can not only be used to manipulate you but upturn a democracy, change the political demography of a country.
China didn’t stop there, it kept meddling with Indian startups and corporations too. The Foreign Policy think tank:Gateway House remarked that investments made by our neighbouring countries hold influence due to the nature of investmentsthey make. This remark came after China’s Central Bank bought a 1.01% stake in HDFC which is speculated to be an opportunistic acquisition.
China’s biggest investment firms, Alibaba, ByteDance, Tencent funds 92 Indian Startups including Paytm, Byju, Oyo, Ola, Swiggy, Zomato, BigBasket, Hike, Delhivery, Make My Trip, Policy Bazaar, Rivigo, Quikr, Flipkart, Snapdeal, Uddan, and Dream 11. These Indian origin firms dominate our daily activities. In the case of a row with China, it has the power to dismantle our economy.
From the data obtained from the official reports of FDI in India published by the Department for Promotion of Industry And Internal Trade, it can be predicted that China is capable of investing aroundUS$2.65 billion in India by the fourth quarter of 2020.
“China is the world’s factory, India can be its office”- remarked billion banker, Uday Kotak. But the matter is more grave than what it seems to be. China is a strategic player, it is trying to weaken the Indian economy while acquiring a series of military bases surrounding India, conventionally called the string ofpearls.
China has made strategic investments in Pakistan, Sri Lanka, Myanmar in the name of facilitating trade. According to Harvard Business Review,‘ a dozen countries owe a debt of at least 20% of their nominal GDP to China”. Pakistan owes China US$ 6.7 billion which is more than double the money it owes to the IMF and so does Sri Lanka. Chinese can use this opportunity to form military bases around India in the case of war.
When the world is suffering from a global pandemic, birthed and spread by China, the economic crisis is at its peak for the last two decades, China is creating political chaos in Nepal, Hongkong, Tibet. They are militarizing at the Indian Borders in Arunachal Pradesh and Kashmir. As Sonam Wangchuk rightly said, the revenue that the Chinese earn because of us is used to buy ammunition for the armyand to strengthen economic and political corridors against India. The beast in China is awake, their master plan of global domination can be fatal to us and our economy. This battle against China can be won not by battle but by changing our consumer behaviour.
Kriti Majumder is a final year student in the Department of Economics at Banaras Hindu University. Views are personal.