China’s Role In The Technology Development Of India


Our expectations are that by 2050, which is a long time away, India will be the largest economy in the world, overtaking both the U.S. and China.”  -Adi Godrej

Recent technological advances in India and China

India’s relationship with its biggest trading partner, China, for years has been interpreted by a one-sided with the import of Chinese machinery and devices. While low-grade ores were exported to China by India, in return. A trade excess in China’s favour has now crossed $50 billion out of two-way trade of around $85 billion.

While the focus of India’s recent business strategy with China is to bridge the gap, chiefly by enhancing exports of agricultural commodities hit by the China-US trade war, Beijing’s priorities have moved elsewhere.

Around $7 billion in Chinese funding has poured into the Indian tech sector, since 2015. A dizzying span of acquisitions has now left Chinese firms as major shareholders of some of India’s biggest tech companies.

The tech companies of China have launched ambitious tailor-made products for the Indian market over the past two years. In the last year, out of the 100 most popular Android apps used in India, 44 were Chinese, including five in the top 10, such as the popular video-sharing platform Tiktok and UC Browser etc. It is said in one recent report, portraying “a Chinese takeover of the Indian app ecosystem”.

India is by no means unique or extraordinary in this wave of Chinese tech accessions and plays. But what is rather curious about the Indian context is the absence of any competitive debate on the implications, particularly of Chinese financing, which has now taken centre arena in the West.

Some latest news on technology about Chinese investments in Indian firms (if you don’t know) 

Only two of China’s three massive BAT (Baidu, Alibaba and Tencent) tech firms – Alibaba and Tencent have capitalized near to $3 billion in various Indian startups. To be specific, the third of the group, i.e., Baidu has been quieter off the mark.

Technology and development

Have you ever thought about where the money is going? Well, according to a KPMG study, it’s a pretty distinct spread. From 2015 till the end of 2017, the enormous sectors have been e-commerce ($3 billion), transportation ($1.7 billion), fintech ($750 million) and travel ($450 million). Alibaba pushed in close to $700 million in Paytm’s parent company, giving it a 40% amount, in 2015. It also has investments in Snapdeal and Zomato, while Tencent has invested in Flipkart, Ola and Practo.

Chinese companies like Bytedance, which is behind Tiktok (and the widely popular Chinese original, Douyin), is among numerous companies that see India as the next bi in the realm of profitable investment frontier. In comparison to the various investments and acquisitions in the West, the motives here are slightly different as it is not about adopting new technology. India is widely seen as falling behind China on this front, but sharing the achievements of the Chinese e-commerce experience and helping Indian companies to scale up in an identical way.

Furthermore, there are issues in China about the slowing domestic market. Sometime back, Baidu CEO Robin Li warned that “winter was coming” for China’s tech sector. India might also occur to be an increasingly favourable market going forward regarding the increasing hostility that Chinese businesses are facing in the West.

India’s trade and investment strategy with China has been slow to understand this movement. India has predominantly had two areas of focus one is opening up China’s market, particularly for IT and Pharma and bringing in Chinese investments in greenfield infrastructure projects in India. Secondly, to produce in India.

A ton of energy has been and is being consumed in both areas. Both have chiefly failed to bear fruit for several reasons, one of which is neither suits the purposes or interests of China. What China is pursuing here is to develop and attain the capacities on its own in both areas, including through accessions. Hence, for instance, Fosun’s $2 billion acquisition of Indian company Gland pharma.

If we consider the fact that the only Indian IT company to be prosperous in China is NIIT for instance, which isn’t trading Indian IT customs. But training tens of thousands of young Chinese in IT skills every year, so they can reinforce Chinese IT companies rather than depending on Indian ones.

In contrast, there’s been tiny awareness at the official level when it comes to investments in tech. That’s because understandably, India’s focus was on greenfield enterprises. In the past two years, the Indian government has initiated trying to cash in on this trend and gave rise to Indian startups to China on essential fund-raising goals. But because it has been behind the curve, there’s also been limited regulation of what’s been emerging in this space.

The benefits and the concerns with new development in technology 

Is this overflow of Chinese money an unalloyed good? To be certain, it has benefits. The input of capital has allowed hundreds of Indian startups  and in the field of Science and Technology development to scale up, gratitude to their financing. So it should inevitably be welcomed, in some sectors.

But are there wider, longer-term concerns of Chinese firms acquiring regulating stakes in certain startups in distinct sectors, and if so, how do we govern the process?

Certainly, this isn’t and shouldn’t become a China-specific issue. The concern of security applies to all companies/ firms and not just overseas ones. It is an Indian problem of how to assure transparent regulation. But in the surge for financing, the question of regulation has been all but resisted.

What are the recent technological advances?

Disruptive technology trends determine how the new year will be created. They will grow and alter various companies at a fast rate consistently. They will transform the future and the long term and will be available seemingly within easy reach of entrepreneurs and investors alike.

Which sectors are sensitive?

Restriction and deciding what sectors are sensitive isn’t easy in an industry of Technology and development that’s changing promptly. If we assume banks to be strategically sensitive assets, is it only a matter of time before online wallets that are increasingly giving all of the services that banks do, fall in an identical category?

If so, we need to raise questions on technology development of India like are we okay with Alibaba, a Chinese company with close ties to the state, practically being the biggest shareholder in India’s biggest online wallet? What assurances do users have that their data isn’t disclosing its way to Hangzhou? Or to seize that statement one step further considering the often blurry private-state limitations in China: would we be okay with the Chinese state being the largest shareholder in Paytm?

Especially when it comes to data security, there are a few precautions. Let us consider the case of the Alibaba-owned UC Browser, which has a 50% market stake in India and is utilized by more than 300 million people, according to reports. The firm was formerly forced to issue a clarification after government reports recommended that Indian users’ data was not entirely being saved on Indian servers.

Undoubtedly, Chinese companies and western ones haven’t been reasonable about interpreting data as “the new oil”. And for them, the Indian market is only second to China’s in terms of its contributions. India also occurs to be a market among the poorest requirements and protections when it comes to data security. An advantageous combination for them, but limited for us.