India has sought foreign direct investment as an economic growth engine. The path to investments and growth has seen setbacks. The setbacks fall on investors and on specific types of investment when looked at over decades. In a current chapter the Chinese investments are being transferred in a Dynamic India.
China has invested, sought to invest, and will likely indirectly invest in India. In the past, investments were wide ranging including ecommerce/internet services, payment processing, and other technology-related investments. The opportunities for Chinese enterprises in a growing tech-society like India were obvious. In the present, Chinese enterprises like BYD have sought to invest in India with promises to invest USD$1B or more in new factories and jobs. For the future, Chinese enterprises may invest in India in indirect ways – such as providing critical minerals to Indian enterprises with front end capacity investments supporting Indian enterprises. Chinese investment is now under review.
The past growth of Indian enterprises, with Chinse investors, has been good for some and less successful in other areas. Indian production of smartphones by Chinese enterprises, with a lack of Indian sources for critical components, has been limited to “kit production” in many instances. Investments in services, like Paytm, have gone on to successes. This past growth is much more limited at present and future.
Cooler government-to-government relationships affect Chinese investors in similar ways. Chinese investors now look to reduced growth and capital pressures at home. The result has been the sale of some stakes in Indian growth enterprises by Chinese investors. Ant Financial has reduced its stake in Paytm, in August 2023, through a series of financial transactions. These complex transactions reduced its shareholdings while locking in some gains. AliPay will part with its 3.4% stake in Zomato after owning up to twice that. The transaction is valued at USD$395M from an investment of USD$50M. Chinese enterprises are “cashing out” some gains as the Chinese economy may grow less rapidly than India in the near term.
Growth in a Dynamic India will include smart vehicles, networks, and connected devices. The services used will also build colossal numbers of customers as uptake continues. Chinese enterprises face increased competition in their domestic markets and desire competing in India. Government initiatives, such as Make In India, create jobs and turnover using foreign direct investment. Choosing investors, and discouraging some Chinese investment, limits opportunities for Chinese enterprises.
Investments in Chinese capacity, indirectly investing in Indian growth, is a likely path. Chinese enterprises still dominate needed refinement and production of raw materials, semiconductors, devices, and network equipment. The Chinese suppliers are forces in supply chains, semiconductor production, device designs, and network components. The competition for investment and necessary electronics will see indirect Chinese gains as much as a Dynamic India wants to keep gains “at home”.
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