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India's foreign direct investment policy changes Huawei ZTE may face worse environment

via:博客园     time:2020/4/29 10:55:36     readed:291

C114 communication network ace

C114 Beijing time April 28 (ACE) according to light reading, with the recent changes in India's foreign direct investment (FDI) policy, Huawei and ZTE, the Chinese network equipment suppliers, may face a harsh environment in India.

Under the new policy, all investments in countries bordering India need to be approved. The provision applies to all sectors of the economy, regardless of the amount of foreign direct investment currently allowed. Although there is no specific reference to China, China is considered to be the target of the new policy. This could have a significant impact on Chinese companies that have become important investors in India.

Some well-known Indian companies, including paytm, Ola, swiggy, zomato, bigbasket and snapdeal, have Chinese investors, the most famous of which are Alibaba, Tencent and ant financial.

A spokesman for the Chinese embassy has reportedly responded, saying the move

Previously, it was reported that China was trying to acquire the distressed enterprises whose market value had declined due to the new crown epidemic. In a notable deal, the people's Bank of China increased its stake in India's largest private bank, HDFC bank, to 1%.

India's policies are similar to those already taken by Australia and discussed by the EU. Last month, Australia announced that the Foreign Investment Review Commission would review all foreign investment. The European Union is also concerned about possible hostile acquisitions by Chinese companies.

This development may have an impact on Huawei and ZTE. However, the government's policy signals about Chinese suppliers are unclear. Indian telecom operators are still waiting for clear information that they can purchase 5g devices from Huawei and ZTE, after a long time for Chinese companies to participate in the 5g test. In addition, Indian authorities have introduced regulations that do not allow foreign suppliers from countries that prohibit Indian suppliers to participate in government bidding. The move is believed to be aimed at Chinese suppliers.

Strengthening the scrutiny of every investment seems to be aimed at further weakening China's influence in India and raising overall Anti China sentiment during the outbreak of the new crown.

Nearly 20% of India's wireless networks use Chinese devices. Bsnl, India's state-owned operator, relies heavily on Chinese companies, which are often seen as offering lower cost equipment. Vodafone idea and Bharti Airtel also use Chinese suppliers' equipment in multiple service areas.

But operators will now be cautious about purchasing Chinese equipment in the future. This is particularly likely to cause trouble for Chinese companies in the Indian market following the planned spectrum auctions in August and September 2020.

India's telecoms industry already faces some challenges, including growing industry debt. Huawei and ZTE are both trying to maintain the profitability of their Indian businesses, and recently have been forced to lay off workers in the country. The new FDI policy will further increase their troubles in India.

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