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India FDI Policy Change: Big Concern for the Indian Startups..?

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According to the news published in the Maharashtra Times, the government will now allow investment from China. Investment can be made only after the permission of the government. Because of this, startups may face economic crisis. Many companies that started recently or are currently making their place in the market are in contact with Chinese investors. But delays are certain due to government permission being necessary for investment.

Chinese finance is the basis of Indian startups

China’s Alibaba Group and Attached Financial, Tencent Holdings and Fosan RZ Capital have invested hundreds of millions of dollars in startups in India.

It mainly includes Paytm,Zomato, Delivery, Big Basket, Policy Bazaar, Udaan, Oyo Hotel & Homes, Ola, Dream 11. These companies are now looking forward to the Foreign Exchange Exchange Act and the authorized notification coming from the Reserve Bank.

Anger in Indian startups

Meanwhile, Indian investors and startups have expressed resentment over the government’s decision. There is a lack of investment in the country for economic growth.

We are currently facing things like tax, revenue, foreign investment permission. By doing so, the government has not only harmed the investors but has also tried to harm the economy, such a response was expressed by Ritesh Banglani, partner of Stellaris Partners.

Significantly, China’s investment in the fast-growing digital economy is a big contribution. According to ET’s news, Chinese investors have invested 3.9 billion US dollars in 2019 in the Indian economy. At the same time, in 2018, this amount was 2 billion dollars, so Chinese investment has been a big role in providing economic strength to Indian startups.


China raging over India’s FDI law.

China has been enraged over changes in the Foreign Direct Investment (FDI) rule by India. China has termed it against the rules of the World Trade Organization (WTO).

A spokesman for the Chinese Embassy in New Delhi said on Monday that India’s new rules for direct foreign investment from certain countries violate the WTO’s non-discriminatory principle and are against the general trend of free trade.

The official said that the new policy imposing ‘additional constraints’ is also against the consensus for an independent, fair, non-discriminatory and transparent environment for investment in the G-20 group.

What did the Indian government do..?

It is to be noted that the Government of India had recently made changes in FDI rules, saying that any company or individual of countries sharing a land border with India will have to get the government’s approval before investing in any sector in India. This decision will affect foreign investment from countries like China.

Why took the judgment..?

This decision of the government is very important. This decision has been taken so that foreign companies of neighbouring countries do not take over domestic companies by taking advantage of the fragile conditions created due to Kovid-19.

Till now the government’s permission was required only for the investment from Bangladesh and Pakistan. The Government of India took this decision after reviewing the policies related to Foreign Direct Investment (FDI) to prevent ‘opportunistic takeovers/takeovers’ of Indian companies due to the Kovid-19 epidemic.

Chinese Embassy spokesman Ji Rong said in a statement, “Additional barriers imposed by the Indian side to investment from specific countries violate the WTO’s non-discriminatory doctrine, and the general tendency to liberalize and promote trade and investment Are against

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