In this photograph taken on August 20, 2019, customers inspect smartphones made by Xiaomi at a Mi store in Gurgaon. (SAJJAD HUSSAIN / AFP)
Researchers and businesses are hoping for a sound investment environment while spokespersons of China’s Embassy and Indian Ministry of External Affairs expressed viewpoints concerning Chinese companies operating in India.
India’s trade with China in 2021 crossed $125 billion with imports from China nearing a record $100 billion, according to China’s General Administration of Customs
A day after Chinese Embassy in New Delhi reacted to the ongoing probe into alleged irregularities by Chinese smartphone maker Vivo in India, the Indian Ministry of External Affairs said on Thursday evening that Chinese companies operating in India need to follow the law.
"Chinese companies which operate here need to follow the law of the land and I think our legal authorities are taking steps as per the law of the land," Arindam Bagchi, the ministry spokesperson,told a media briefing when he was asked to comment on remarks by a spokesman of the Chinese embassy.
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The Enforcement Directorate carried out an investigation against Vivo under the provisions of the Prevention of Money Laundering Act.
The directorate raided 48 locations of Vivo Mobiles India Pvt Ltd, owned by China's BBK Electronics, and its associated companies across the country on July 5.
The ED also said it blocked 119 bank accounts linked to Vivo's India business that were holding $58.76 million, as part of a probe.
Vivo said it was cooperating with authorities and was committed to full compliance with Indian laws.
Multiple investigations by Indian enforcement agencies into Chinese companies are damaging the confidence of foreign entities investing and operating in the country, China's embassy in New Delhi stated late Wednesday.
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Such frequent investigation "impedes the improvement of business environment in India and chills the confidence and willingness of market entities from other countries, including Chinese enterprises to invest and operate in India," the embassy said in a statement.
Chinese investments in India cannot be replaced by Organisation for Economic Cooperation and Development investments in affordable mobile phones and similar sectors, said Professor Amit K Biswas, visiting Fellow at the Institute for International Economic Policy, University of Bonn, Germany, and faculty of Economics & Politics, Visva-Bharati University, Santiniketan, West Bengal.
In no way India should harm the general investment environment in India. If, irrespective of countries, investors ' confidence are lost, world FDI would be hard to come by, Biswas said.
And despite India’s ban on hundreds of Chinese apps since the border tensions between the two countries, trade between the two countries remained high.
It shows that India is a big market with a growing purchasing capacity and that it cannot afford ignoring Chinese investment, said Professor, Murali Kallumal, Centre for WTO Studies, Indian Institute of Foreign Trade.
Many Chinese firms have been struggling to do business in India after border tensions in April 2020. Since then, India has banned more than 300 Chinese apps and toughened rules on Chinese investment, citing security reasons.
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Indian authorities carried out searches the offices of Chinese technology giant Huawei Technologies on the basis of alleged tax evasion in April this year. Huawei’s Chinese peer ZTE and smartphone makers Oppo and Xiaomi were also similarly raided last year.
Chinese smartphone brands had nearly three-quarters of the Indian smartphone market in the third quarter of 2021, according to Counterpoint Research. Xiaomi is the country’s biggest smartphone maker with around 22 percent market share.
Chinese smartphone manufacturers have also been assembling their phones in India, which are creating thousands of jobs. Forcing them out would be tough without a decent alternative, Indian experts said.
India’s trade with China in 2021 crossed $125 billion with imports from China nearing a record $100 billion, according to China’s General Administration of Customs. According to Piyush Goyal, the commerce and industry minister, FDI from China stood at a total of $1.8 billion between 2015 and 2019.
The data underlines continued demand for wide range of Chinese goods, experts said.
The writer is a freelance journalist for China Daily.