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Investment from China: Approach of India

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Introduction

International Business is need of an hour. India is being member of World Trade Organization and other International Agency, do support the foreigner Individual or Entity to make investment in India. Foreign Investment is always need of Country to accumulate the capital for further investment, employment generation and scalability of Business and Innovation align therewith.

No country in Globe can run alone, except to have tie-ups and nationwide approval and acceptance. Across the globe various country has different specialty and character based on skillset and geographical or resources availability which in-fact do generally differ with each other country, develop the need of nation to open Business Boarders.

China is unavoidable irrespective of human sentiments and government agenda, it may seems they are strict but it’s not in actual. So called Social Media campaign to attract the human sentiments for public at large is temporary and is not the basics of International Business. The Government is tirelessly working on improvisation of Foreign Investment in order to boost their confidence and faith in India and its growing market irrespective of Country.

Read Our Blog: Foreign Investment in Non-Banking Finance Company – Caution to Halt

The incidence of recent mishap do raise conflict on relation in between China and India but it’s not on long run. It has been rightly said that the person can change friends but not the neighbor, and its matter of Nation. So Foreign Diplomacy with neighbor Country and other do drastically differ, is globally accepted norms of Foreign Policy just because of single scenario that neighbor can’t be changed. Matter is always seen with greater importance. The Government of India has very basic Foreign Policy i.e. “Neighbor First”, policy statement and action of Government may seems different in Social Media but not on actual ground of implementation.

Government of India acknowledge its strength and focus to develop nation and it’s always priority of each Government across Globe, as like others, simple. No questions on it. And to acquire the agenda of Development, Obviously Government need revenue from Direct and Indirect Taxes and other Fees as per stated Act, Rules and Regulations as well as International Support in terms of Foreign Loan, Grants and Investment. And as like others, Government reserves the accessibility and allow ability of getting technical support, loan, investment etc. from country. It is also not bad at all. Every Country reserves this right, either India or China. 

Government of India has

  1. Huge Demography in term of human resource and market space
  2. Make in India is initiative to establish the manufacturing plant and set up to promote the business from India
  3. Aatmanirbhar Bharat is again flagship initiation of Government to make country self-reliant and independent as like other developed nation either its USA, Japan or China
  4. Global Market place due to huge demography and good purchasing power capacity
  5. Low resource cost either its Human Resources, Infrastructure or Compliance Cost of any business set up.
  6. Tax Relief and Government Initiative, again provide edge in comparison to other country to attract the foreign investment.
  7. Law and order of nation is also another aspect from where political stability and ongoing Governmental support for establishing the industry is there in India

In fact, every aspects to safeguard the foreign investor interest in India is set up by Government in order to develop faith and confidence in Indian Industry.

Government of India has genuine movement of it to make country better than earlier either domestic industry support or foreign investment confidence and boost. Result is there.

Talking about India and China

Government has no biasedness with China Investment and their business scalability from here India. As China dominance in various trade product still prevail and unavoidable. And on obvious note, Government may seems negative with Chinese Investment but not like the way media are showing. Regulatory approval and license mandate by Government is internal policy of any country and every country in the globe ask for it. And whosoever want to extend the business across the globe. It need to go with required approval and licensing. This are basic requirements of any business to start in other country. Over and out, the Budget and other commercial regulation does not bother the Chinese Individual and entity to make investment in India, run organization, do business and repatriate their money on their country freely but on compliance of Indian Law and Regulation.

By the Government Budget the hike in Custom Duty is seen more precisely on the products highly imported from China like mobile device manufacturer, auto component, heavy machinery, electrical compliance, telecom equipment and home appliance. But it never going to impact the China Manufacturer reason being it make hole on consumer pocket and demand of such product is not downfall instead make high supply.

Two way trade between the longstanding economic and strategic rivals stood at $77.7 billion last year, according to provisional data from India’s Commerce Ministry. Although that was lower than the previous year’s $85.5 billion total, it was enough to make China the largest commercial partner displacing the US bilateral trade with whom came in at $75.9 billion amid muted demand for goods in the middle of pandemic.

China Displaces the U.S. to regain India’s top trade partner slot in 2020

Source: India’s Ministry of Commerce

In 2020, even as relations with Beijing plunged to new lows and New Delhi took steps against Chinese-linked businesses, China reclaimed its position at the top of the list of India’s major trade partners, replacing the USA that had climbed to number 1 in 2019.

Let’s have look on India China Trade relation for last 5 years

 
It can’t be denied that due to conflict on relations in between both country dozens of China-linked apps were banned, major infrastructure contract awarded to a Chinese firm was canceled and import of certain kinds of power equipment was banned, import duty are hiked, Foreign Direct Investment Approval is Imposed and precisely Production-linked incentives schemes were announced across sectors to reduce dependence on critical goods from China, even though building self-reliance in these critical sectors likely take several years. Irrespective of public announcement and media flaunt on China from India is baseless reason being without the better planning and strategy simply another announcement of Ban and Boycott China does not help the reality except the Political Party in ruling get popular and nothing else. This is because on ground level people doing business has no impact on it and they are doing their business. And doing business with across globe is never been offended and nor it will be in future. Compliance is there which need to be compliant and they are been done, procedural delay for some sense may seems at bureaucrats level which is common in India not only for China but often to all. Therefore first thing to ignore or avoid is Media Triumph for ruling Government, reason being data speaks itself more loudly and clear. So the basic requirement is to have genuine Compliance Officer to put the everything in order as per prevailing law of Nation. 

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Author
Vinay Singh
Vinay Thakur is Managing Partner in Corpseed. He focused on payments, digital transformation, and financial technology for over 15 years and holds strong expertise on fintech startups, banking innovation, and investors with a keen understanding of the trends and activities of startups, banks, and investors in the space.