Pressure from China overshadow PM Modi's dream - World Updatez with MK

Pressure from China overshadow PM Modi's dream

Indian startups, facing the impact of the global epidemic, are facing a new challenge. Prime Minister Modi has been very vocal about startups and also launched a campaign like Startup India.

         Image copyright getty images

Pressure from China overshadow PM Modi's dream.

The challenge comes as the ongoing standoff between India and China.


Since June, India has been economically in the currency of the aggressor. At that time, 20 Indian soldiers were killed in clashes between China and the Indian Army in Ladakh region.

Since then, both sides have been accusing each other of breaking border agreements. Tensions between the two countries continue to rise.

Chinese companies have already invested in 18 of India's 30 unicorns. Unicorns are used by technology companies that have a valuation of more than a billion dollars.


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These Chinese-invested companies include food delivery apps, a taxi aggregator, a hotel chain and an e-learning program company.

But, now, the future of these companies and startups hoping to get money from Chinese companies in the future has become uncertain.

Says Harish Chawla, partner at True North, a private equity firm. "Certainly a major source of capital is over. "

 "Now, the growth in valuation and the pace of deals are likely to slow down as Chinese companies were particularly active in the mobile and consumer segments."

India has already banned more than 200 Chinese apps. These include apps like The Highly Popular Tickettalk and Pubji. In addition, the Indian government has also stopped Chinese investment in highway projects and small, medium companies. The slogan of China's boycott is gaining momentum.

In April, India introduced a strict foreign direct investment (FDI) policy to curb the takeovers of companies forcefully during the epidemic.

It has a powerful impact on India's startups making efforts to gain capital.

A decade ago, Chinese companies' investments in India were non-existent. But, statistics from startup research firm Terson show that 35 Chinese companies and 85 venture capital (VC) and private equity (PE) firms have invested more than $4 billion in several big startups, including Paytm, Snapdeal and Swiggy, since 2010.

China's investment in India has increased from 5 per cent to 11 per cent as a share in foreign direct investment (FDI).


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Even though India has refused to join China's Belt and Road drive, India has signed the virtual corridor.

Chawla says "There is little possibility of a major impact on early-stage investments."

As for Chawla, the real power will be for companies that have already raised money from companies like Alibaba, Tencent and Baidu. It would also be difficult for companies that were trying to raise more money from Chinese companies.

Alibaba is believed to have put all investment plans in Indian companies on hold.

The founder of a Unicorn with Alibaba's investment said on condition of anonymity, " "They are certainly surprised by India's step, but they don't have much choice."


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