Two women who often post videos on video-sharing app TikTok, shoot a video on a miniature cooking inside their house in Mumbai, India on July 1. Photo: VCG

Many investors have come to realize the political risks of investing in India after the lessons of the past two years, a Chinese lawyer said on Wednesday, after Indian magazine Outlook reported on Tuesday that banned Chinese apps are now returning to the Indian digital ecosystem under various corporate structures with layered ownership.

The Indian government rolled out discriminatory regulations against Chinese investment in 2020, and it banned over 200 Chinese apps including Baidu, Tencent's WeChat, and several Alibaba-backed apps. As a result, Chinese companies' investment in India declined by 15.7 percent to $200 million in 2020, data from the Ministry of Commerce showed.

The short video apps and gaming apps have reappeared, and are now gaining millions of users, the report said, noting that many apps that came back under different names are thinly disguised.

Li Qin, a Chinese legal counsel with India-based law firm D.H. Law Associates, told the Global Times on Wednesday that some Chinese capital had indeed returned to India but the general situation is that most Chinese investors have learned to avoid the Indian market for the time being. 

After reaching a peak in 2017, Chinese investment in the Indian technology landscape declined, especially after 2020, Li said. "In sharp contrast with the effervescent atmosphere before, now there have been practically no road shows linking potential investors and start-up entrepreneurs, and even virtual online road shows have also been greatly reduced."

Li said that investors typically seek an exit from such companies within two or three years, and this is something that could not happen in India at the moment.

Chinese investors used to crowd the Indian technology start-up scene, believing the country could be the next-billion-user market that creates wealth for technology venture capital. However, after a deadly border clash between the two countries in June 2020, the Indian government blatantly cracked down on Chinese investment, believing it was sending a warning to China.

Amid geopolitical tensions, Chinese investment in Indian start-ups dropped rapidly in 2020. In terms of private equity funds and venture capital investment, Chinese companies put just $1.05 billion into Indian start-ups, plunging from 2019's $3.5 billion, financial news portal yicai.com reported in February.

Chinese analysts pointed out on Wednesday that Indian media outlets are hyping the issue of the so-called return by Chinese capital, but such vigilance against Chinese technology investment also revealed to a certain extent the incomparable efficiency of Chinese investment and Chinese technology.

For instance, TikTok was very successful in India before it was banned. The app had about 167 million users in the country.

Chinese internet giant Tencent was among those companies investing through an overseas vehicle when it channeled $225 million into Indian social media start-up Sharechat in April, the Financial Times reported.

In the first half of 2021, global investors pumped at least $11 billion into Indian tech start-ups in over 600 deals, the Business Standard newspaper reported in July.