Since last year, Indian traders’s body – Confederation of All India Traders (CAIT), has been firmly opposing the e-commerce giants like Amazon and Flipkart, and also in August last year, CAIT asked to boycott Chinese goods along with demand of 500% import duty on Chinese goods, to help small traders in India.
Now in a latest, on Tuesday, CAIT has sent a letter to Finance Minister Nirmala Sithraman, IT and Telecom Minister Ravi Shankar Prasad and Commerce Minister Piyush Goyal seeking a thorough evaluation of Chinese investment in Indian companies.
The traders body highlighted that investment in Indian start-ups including Ola, Flipkart, Paytm Mall, Paytm.com, Swiggy, Hike, OYO, Zomato, Policybazaar, BigBasket, Delhivery, MakeMyTrip, Dream 11, Snapdeal, Udaan, Lenskart.com, Byjus Classes, Citrus Tech, etc needs a thorough evaluation.
The CAIT letter said, “Chinese companies like Alibaba, Tencent, and others are lead investors in many Indian start-ups and as such it is to be ensured that no foul play is taking place under the garb of investment.”
CAIT secretary general Praveen Khandelwal said, “….we also urge that the Chinese companies that have set up their manufacturing plants in India should also be investigated to ensure that the data they have accrued is not sent to China in any way and there is no threat to the security of the country.”
According to a Gateway House report, Chinese investors have pumped in an estimated $4 billion into India’s tech startups which includes investments in 18 out of 30 Indian unicorns.
According to the report, the official FDI inflows from China to India do not present the full picture of Chinese investments in India as the investment in India has not been made in the name of the Chinese entity/investor, and is, therefore, difficult to trace. It is because Chinese funds and companies often route their investments in India through offices located in Singapore, Hong Kong, Mauritius etc. For example, Alibaba’s investment in Paytm was by Alibaba Singapore Holdings Pvt. Ltd.These don’t get recorded in India’s government data as Chinese investments.
Last month, India’s Authority for Advance Rulings (AAR) rejected Tiger Global’s application for exemption from payment of capital gains tax on sale of its stake in Flipkart to Walmart in 2018. In a ruling, AAR stated that the Tiger Global’s investment was routed through the Mauritius entity only to benefit from the India-Mauritius tax treaty while the ‘head and brain’ of the company was in the US, which is similar to what Chinese investment firms have done in the past by routing the investment via Singapore.