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Following the money: China Inc’s growing stake in India-China relations

Since 2014, an influx of Chinese capital in India has transformed the structure of India’s trade and investment relations with China. Until that year, the net Chinese investment in India was US$1.6 billion, according to official figures. Most of the investment was in the infrastructure space, involving major Chinese players in this sector, predominantly state-owned enterprises (SOEs). In the next three years, total investment increased five-fold to at least US$8 billion, according to data from the Ministry of Commerce (MOFCOM) in Beijing, with a noticeable shift from state-driven to market-driven investment from the Chinese private sector. Official figures, however, underestimate the amount of investment as they neither account for all Chinese companies’ acquisitions of stakes in the technology sector, nor investments from China routed through third-party countries, such as Singapore. For instance, a US$504 million (Rs. 3,500 crores)1 investment from the Singapore subsidiary of the mobile and telecom firm Xiaomi would not figure in official statistics because of how investments are measured.

The aim of this paper is to provide a more complete picture of Chinese investment in India and to assess the implications of Chinese investment and acquisitions for India’s diplomacy, trade strategy, and security. Rather than attempt to provide a definitive figure, which is beyond this paper’s scope, the broader objective is to examine the growing stakes of Chinese companies in India and assess the implications for the relationship. This paper draws on MOFCOM data, publicly available information sourced from Chinese firms, press reports in China and India, and background information shared by Indian and Chinese officials. It is possible to estimate that the total investment from China exceeds official figures by at least 25%, and this is a very conservative estimate. When announced projects and planned investments are included, the total current and planned investment is three times the current figure, crossing at least US$26 billion. In greenfield investments and capital invested in acquiring or expanding existing facilities in India, Chinese companies have invested at least US$4.4 billion. Chinese companies have also invested in acquiring stakes in Indian companies, mostly in the pharmaceutical and the technology sectors, and participated in numerous funding rounds of Indian startups in the tech space. Another US$15 billion approximately is pledged by Chinese companies in investment plans or in bids for major infrastructure projects that are as yet unapproved.

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