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Indian Companies stakes are slowly going into the hands of China central bank

Indian Startup Chamber

  • July 07, 2020
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As the tension on the border between India and China intensifies, the need for keeping a track of Chinese investment in Indian companies has also become important to strengthen our fight with China at the economic front. But several aspects are weakening this fight, one of them is China central bank slowly buying shares of the Indian companies. The stock-exchange reports of April have revealed that China's central bank, People’s Bank of China is currently holding a share of 1% in HDFC which is the mortgage finance company of India. The other companies in which the People’s Bank of China has invested in are Ambuja Cement which is one of the major companies of the Cement sector and Piramal Enterprises of the pharma sector.

People's Bank of China holds a share of 1% in HDFC which accounts for a total worth of Rs 3,100 crore, 0.32% share in Ambuja cement which converts to a total worth of Rs 122 crore and 0.43% share in Piramal Enterprises which worth Rs 137 crore. There are several reports in the previous few months which are warning that many of the investment firms of China which have direct or indirect control of China government in them are planning to buy shares in the Indian companies which are strategically important to the Indian economy.

China's central bank has stakes in many other companies but since the shares are less than 1% so they are not required to be announced publicly.  When on April 12 PBoC stake in HDFC came into light, the government quickly came into action and amended the foreign investment rules into India, now any company which shared a border with India required government approval for investing in any company. It's China old strategy to take over the companies which are undergoing great losses. With COVID-19 hitting hard on the stock prices the government should be very cautious in formulating the FDI policies. The nature of trade with China has changed since 2014, as after 2014 there has been a growth in the inflow of investment from China.

China's investment in India currently stands at $26 billion and it has pledged to invest another $15 billion in the major infrastructure project. The present trend is that China is using startup investment as a gateway to affect the leading companies in various sectors. An example of which are Alibaba investment in the Paytm group, Zomato and Tencent investing in startups like Byju’s, Ola, Flipkart.

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