Conflicts arising at India and China’s borderlines have lately attracted headlines across the world. With a tense diplomatic standoff between the two major powers of Asia across the borderline, both countries are treading on a fragile ice path that is sought to affect their trade relations in the long term. The economic stakes in this regard are too high, given the huge trading relationship they both share and particularly their close ties in the technology sector.
India has a higher import rate for various goods coming from China than any other country. Also, India and China have spurred each other’s growth as emerging technology powerhouses over the last few years. But is it a two-way intersection regarding growth status in the technology sector or is China dominating the Indian market with this rate?
Tensions Across Border Affecting Trade Relations
Over the last decade, The Great Wall has strategically crept its roots deep in the Indian technology and allied sectors. And with the way China has become the largest manufacturing hub of various goods across the world, there seems to be little hope in stopping the dragon that has only grown fiercer each year with their finished and cost-effective products threatening various industries. And this has led to China dominating the Indian market with its booming economy.
But the border dispute threatening those ties along with the rising anti-China sentiment sweeping across India due to the recent pandemic situation, has led to a boycott of Chinese products and services. Sensing the situation, the Government of India has started to amend and create new rules on foreign direct investment (FDI) that could put a constrain on China’s ability to cash in on India’s internet boom. Despite all these measures, are they still enough to put a stop to China dominating the Indian market in the meantime?
Let’s take a glance at some of the booming markets of technology to get a grasp on how China dominating Indian market scenario is still a reality at the present.
China Dominating Indian Smartphone Market
Being aggressive in every aspect, China has forged a path for itself in India’s technology sector over the last few years. China made its entry into India’s technology scene by flooding the smartphone market with low-cost smartphones from brands like Xiaomi and Oppo and investing money heavily into various Indian start-ups.
According to the latest research, Chinese smartphone brands had already captured 72 percent of the Indian market in 2019 as compared to 60 percent in 2018. Making its presence known with China dominating the Indian market scene, four out of the top five smartphone brands in India are Chinese and thus, control around 80% of the smartphone market unlike local brands with only 1% of the market presence.
Therefore, halting the growth of local smartphone industries with its abundant supply of cost-effective smartphones and accessories. Having more than 99 percent of smartphones manufactured locally that are sold in India, it is not an exaggeration to say the fact that China dominating Indian market is the harsh reality India has to accept.
China Investments in Various Indian Tech Start-Ups
A recent report on China’s heavy investments in India’s various technology sectors has measured that China’s linked investments in the Indian tech start-up sector alone are around $4 billion worth. And though these investments might be small and fragmented across various unicorn companies of India, China has deeply embedded itself in the Indian society via the tech sector. And is currently holding a great share of influence with China dominating the Indian market due to these heavy investments.
Chinese investments were exposed to light and under the Indian Government’s scrutiny recently during the Covid-19 epidemic, which had its origins in China.
The companies holding Chinese investments range from Big Basket, Byju’s, Delhivery, Dream 11, Flipkart, Ola, Oyo, Paytm, Paytm Mall, PolicyBazzar, Quikr, Snapdeal, Swiggy, Zomato among the few, proving the fact of China dominating the Indian market.
China to Enter Internet Market along with EV
With the Government’s various initiatives to promote the Electric Vehicle (EV) in India’s automobile sector, China has its eyes set on dominating this Indian market too with their large manufacturing plants already covering a large part of its sector.
Already a step ahead in the mad race of growing electric mobility sector, China’s leading EV company, Sunra, has also expressed its interest in building a factory in the country seeing the potential of India as an emerging as well as the world’s biggest market for electric bikes in the next few years. Thus, staking its presence to fulfill the reality of China dominating the Indian market.
Similarly, with the rapid rise of the Internet boom in the Indian market, China wants its stakes in this sector too with Huawei helping in the building of 5G networks in India’s fast-growing internet economy, ignoring the fact that China dominating the Indian market will become true soon.
India’s Challenge to Curb China Influence
Seeing the current scenario of China’s growing influence, the Government of India had to take drastic steps to counterattack its reach in every sector of the Indian market. The Government created new policies regarding foreign direct investments (FDI) coming from countries sharing a land border with India while subjecting them to heavier scrutiny. Thus, putting a stop to China dominating the Indian market a new reality.
According to the Government, these rules were intended to fend off opportunistic acquisitions and takeovers of Indian companies that are still struggling and are on the brink of fallout amid the pandemic times. Time will tell if these new rules would be effective enough to curb the growing influence of China dominating the Indian market in the near future.