There are several Indian companies
especially in the edtech, food tech and fintech space such as Paytm, Zomato, Swiggy, BYJU’s, Doubtnut which have backing from Chinese investors.
According to reports, Chinese investors
have put in $4 billion in Indian startups over the years which includes over half of the 30 unicorns in the country.
“The new Chinese technology rules might not have a day to day operational effect but the investors might come up with unique ways to control their interests in Indian companies,” says Mahendra Swarup, Founder & Managing Partner at Venture Gurukool Capability Fund, which has three Chinese VCs as co-investors.
As Chinese technology giants such as Tencent, Xiaomi
have diversified investments across the world, when you pull one particular string, another yarn ball might unravel somewhere, according to top VCs.
Based on the new regulations, any Chinese company that maybe in discussions with Indian business for a possible takeover and plans to export the technologies covered by the restricted list would have to seek prior approval of the government and go through the licencing procedures, explains Salman Waris, managing partner at TechLegis Advocates and Solicitors.
However, there are very few Indian companies
which have or are actually going to acquire Chinese companies. “We haven’t seen many M&A activities between India and China
in the past. This move, however, complicates cross border deals to a much larger extent,” says Siddarth Pai, founding partner of early stage VC fund 3one4 Capital.