A customer holds plastic buckets as he comes out of China Bazar, a shop selling Chinese made products, in Hyderabad on June 24. Photo: AFP

In just a year India has turned from a market darling to a risky land in the eyes of many Chinese investors.

In 2019, Chinese tech investors praised India as the "Next 1 billion market" that will emulate China's mobile internet success. Realme, a smartphone brand, rose to stardom from relatively humble beginnings by striking a delicate balance that guarantees high performance smartphones at affordable costs for Indian consumers. 

In the three years since 2017, Chinese investment in India totaled $10 billion.

However, experts said the COVID-19 pandemic and recent diplomatic ruptures are changing relations for the worse. The Indian government's closure of its border after the epidemic outbreak in China crippled business exchanges. Then India itself entered lockdown with halted supply chains that crippled the operations of many Chinese companies. The fatal border clash on June 15 between Indian and Chinese troops has since further deteriorated bilateral relations.

Amid a high tide of jingoism targeting China, the Indian government carried out moves damaging the confidence of Chinese investors and blemishing its status as a worthy investment destination for foreign companies. 

In just two weeks' time, the Indian policymakers at national and regional levels have paused key project proposals of automotive projects, vowed to replace contractors for its railway signaling upgrade project -the single largest Chinese deal in the country, delayed customs clearance for goods from China, threatened to slap tariffs on Chinese solar panel imports, and moved on Monday night to ban a total of 59 apps of Chinese origin, including the hugely popular TikTok and UC Browser, on "national security" grounds. 

The moves are so swift and in contrast to India's notoriously low efficiency in facilitating investment procedures that some Chinese observers term the process as an "Incredible India" moment. 

 "Right now, the majority of Chinese working in India want to go home for their safety due to the COVID-19 pandemic which seems to be getting out of control in the country," a top representative of the China Council for the Promotion of International Trade in India told the Global Times, summarizing the real-time thinking of the 20,000-strong Chinese business community in India.

Now that increasing investment this year or the next is off the table, some Chinese companies and investors express uncertainty about what to do in India next. 

Shifting attention

For those Chinese firms that have been operating in India for years and have made deep footprints, the current situation has become a "big headache" for their next move.

"We cannot make predications based on the current foggy market outlook," said head of a Chinese photovoltaic firm in India surnamed Wang.

Living in India for over a decade, Wang told the Global Times that his firm is faced with difficulty in making decisions about how to take the next move in India. 

"We have received new orders despite the epidemic in India but meanwhile worry about whether we can deliver those orders in time," Wang said.

Wang said the unworkable management of staff and business travel to India because of the restrictions on cross-border travel has also posed obstacles for the firm.

"We are also concerned about whether the supply chain in India could be guaranteed with the temporary resumption of logistics. We don't know if there will be more shutdowns someday if cases spike."

India risks becoming the next epicenter of the pandemic, with more than 540,000 confirmed cases as of press time, and the government of Maharashtra state on Monday extended the lockdown in the state till July 31 amid a steady rise in the COVID-19 cases.

If more states follow suit to extend the lockdown, it will be disastrous for the recovery of the hard-hit Indian economy. And it is exactly due to the impacted economy that the Indian government keeps shifting public focus via fanning the anti-China sentiment, according to Wang.

"Such a makeshift ploy could only take effect for a short period, yet won't help to save India's already fragile economy," he added.

Analysts and investors active in the Indian market for years told the Global Times that new entrants into the Indian market, who a few months ago had been hoping to invest in India, now have their confidence heavily battered.

Sha Jun, executive partner at the India Investment Services Center of the Yingke Law Firm, told the Global Times only around 20-30 percent of Chinese firms operating in India invest in large scale and heavy assets in India, while the vast majority are filled up with small investors with light assets.

"The number of Chinese investors consulting with the investment opportunity in India has obviously dropped over recent months and the current situation has the biggest impact on small investors," said Sha.

Trading firms have nearly given up on the Indian market due to the disruption caused by COVID-19 and rising political tensions.



Canceled employment in India 

A Chinese surnamed Wu working in the smartphone industry in India told the Global Times on Monday the Chinese company he works for has halted any existing plans to expand investment in India this year, due to both rising coronavirus infections and anti-China sentiment in the country.

"We initially planned to add about 10,000 local workers in India and three dozen new stores, but now those plans are all gone," Wu said.

And Wu's company is not alone in its decision to halt expansion. 

"Many Chinese companies and individual businesses operating in India that I know have suspended their investment and trade plans in India since March," Wu said.

He said that Chinese companies would seriously consider whether to retreat in full scale from the Indian market in 2021 based on the hostile political climate and epidemic.

The urgent problem is India's crackdown on Chinese companies by purposely delaying customs inspections for goods imported from China, Wu said. "Now all of our products are held up in ports in India. If that problem remains unsolved, Indian consumers would have to pay for a price rise since our inventory is running out."

Chinese tech and venture capital firms that have backed Indian start-ups in recent years and placed their bets on the long-term trend will also be affected, said Sha.

"Their further investment decision is likely to be affected by the unfriendly political and economic atmosphere," said Sha. "A hostile external environment means their invested targets will have trouble in their operations or revenue generation, making investors difficult to sell their stakes at a later date." 

"Despite some reasonable and calm voice within India, the hype by Indian media and the supercharged mood by the Indian mass is concerning us, especially the extreme actions against Chinese businesses in the states controlled by Indian's ruling Bharatiya Janata Party.

That have had some really bad consequences, and India's short-term business environment outlook is now "absolutely negative," an industry insider at a leading tech company with years of experience in the Indian market told the Global Times on condition of anonymity. 

"High-profile boycotting of Chinese products movements on social media in India is a result of political manipulation; however it has no influence offline. Our brick-and-mortar stores remain open and sales have seen no drop at all," Wu said.


Newspaper headline: Investment in peril