A food delivery worker for online app Zomato dons gloves during a government-imposed nationwide lockdown on Sunday as preventative measures were launched against the COVID-19 coronavirus in Mumbai. Photo: AFP

India is posturing for a complete economic decoupling from China, willing to decapitate its high-tech upstarts as media reports suggested a key technology venture risked facing a cut-off from Chinese capital.

Zomato, a Indian food delivery start-up with a market valuation of $3 billion, is reportedly unplugged from the Chinese capital funding it secured in January, as a tranche of $100 million from Ant Financial, a sister firm of Alibaba Group, is facing a government approval process under India's new investment regulations, the Financial Times reported Sunday. 

Following a recent border clash, India has moved to confront China economically, though it will come at some expenses. It has stalled customs clearances at its ports of imports from China and moved to ban 59 Chinese digital apps last week. 

India's new investment regulation, unveiled in April, is believed to be discriminative against investors from China and the Zomato could be seen as the first case to see how far India wishes to push in an area that has attracted some $6 billion investment. 

Zhao Gancheng, a research fellow at the Shanghai Institute for International Studies, said although it is not certain that whether Zomato will be blocked from accessing funds from Ant Financial, the latest move shows that the Indian government is willing to sacrifice the future of its high-tech champions to achieve its political goal.

Although China has restrained itself from launching an economic tit-for-tat, Zhao said that India continues to press ahead with tactics to infringe Chinese businesses in blatant violation of WTO rules.

"At such, India is inviting Chinese economic retaliation," Zhao told the Global Times on Monday

Chinese firms are a force to be reckoned with in India. Over 75 companies in sectors ranging from e-commerce and fintech to social media and logistics have Chinese investors, according to Mumbai-based think-tank Gateway House. A majority of India's 30 unicorns - start-ups with valuations of over $1 billion - have Chinese investors.

Sha Jun, an executive partner at the India Investment Services Center of the Yingke Law Firm and who is familiar with the high technology investment in the country, told the Global Times that the Zomato case could have serious implications. 

"Indian startups will find their cash chain arrangement disrupted without enough time to come up with a backup plan. They'll miss out on the heyday that typically occurs in early company development if they can't get a cash boost from Chinese companies," Sha told the Global Times on Monday.

"India's start-up ecosystem will be the biggest looser because the change [in regulation] means a lot of investors from China are holding back their capital," a veteran venture capitalist from New Delhi told the Global Times on condition of anonymity.

Ant Financial could not be reached for comment on Monday.  


Newspaper headline: India targets capital investment from China