We are going to discuss the root cause why talented people of India will face problems if they are not aware of these causes. One of the cause is FDI and How FDI made Indian startups foreign is serious issue.
What do you mean by FDI
FDI means foreign direct investment or foreign direct investment. If a foreign company invests money directly in an Indian company then it is FDI. Like Walmart recently invested in Flipkart.
China’s plan to capture Indian market through FDI
As China’s investment is heavily in startups such as Snapdeal, Swiggy, Udaan, Zomato, Big Basket, Biju, Delhiveri, Flipkart, Hike, MakeMyTrip, Ola, Oyo, Paytm, Paytm Mall by third countries like Singapore or Mauritius.
Aso China’s investment is four billion dollars in Indian startups.Also China’s largest tech companies and venture capital have become major sources of investment in tech-based startups in India.There is a scheme of 100 % FDI in Indian startup. So if the Idea is from Indian the owner is foreigner because of FDI .
The people who own maximum shares will be the owner of that company. Despite the fact who built up and whose hard work it was. Maximum media channels have FDI that’s why the owners are foreign . Furthermore these maximum media channels act like a puppet on the hands of these investors.These startups are worth a billion dollars or more in the market.
Why Indian startups need FDI
As small scale industries have unlimited ideas but due to scarcity of funds they have to borrow money from foreign investors.There were around 10,000 startups in India in 2018. In addition it increased to 1,00,000 by 2020. Additionally startup India also faced the threat facing the Indian retail sector when foreign investment was high. Because of this the field of innovation is going to foreign . Therefore it is driving profit abroad . As a result the country’s balance of import-export is deteriorating which further deteriorates the value of rupee.
Stealing Indian startup in name of investment
The bulk of investment from China comes from Indian startups only . Moreover government is not fully aware of the correct shareholding pattern of most such companies. According to Gateway House, Chinese IT investors invested $ 4 billion in Indian startups over the years.
Also 18 of India’s and 30 unicorns were funded with Chinese investors. But government data shows that investment from China remained unchanged. Despite the government’s efforts to attract capital from neighboring country. This is because most of the investment from China is made through Singapore.
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How much NRI can invest
According to a statement by the Ministry of Commerce and Industry, the government has amended paragraph 3.1.1 of the current FDI policy. Under para 3.1.1, any non-resident body or company can invest in India under FDI policy. NRIs are prohibited from investing only in sectors / activities that are prohibited.
However, a citizen of Bangladesh or any company formed in Bangladesh can only invest here under the government route. On the other hand, a citizen of Pakistan or any company formed in Pakistan can invest in sectors other than defense / space, nuclear power and restricted sectors / activities for foreign investment only under the government route.
Countries who have tightened the FDI rule
Many more countries have also tightened FDI regulations. In 2019, the European Union made rules to investigate FDI, citing security. The US has tightened investigations into investments from China. China was believed to be acquiring large-scale assets in the US. Australia also tightened acquisition regulations by foreign investors in March. The reason of Australia’s brave move view of the danger of selling cheap prices of strategic assets amid the Coronavirus crisis.
Who will get the profit more
Now Indian startups entrepreneurs is encouraging to release more and more VC investors funds. In the last few years, Chinese private sector companies have increased investment in various sectors like telecom, petrochemical, software and IT (IT) in the India market.According to a report released in February 2020, several large Chinese companies such as Alibaba and Tencent have invested in at least 92 Indian startups.
Also in 2021 the housing finance company HDFC Ltd. reported that currently the stake of People’s Bank of China in the company rose to 1.1%. These FDI foreign investors will get the maximum profit when the market will be high. This is How FDI made Indian startups foreign.
FDI in Media
The government has shared information about FDI in digital media. The government is aiming to create a self-reliant and accountable digital news media ecosystem. Besides 26 percent foreign investment has been allowed in digital media. For this, the permission of the government will be necessary to make investment. This will be applicable to those who upload or stream news and current affairs on websites, apps or other platforms. This will also apply to news agencies giving news to digital media.
FDI in retail
Currently there are around two crore retail businesses across the country. Its market is more than 255 trillion rupees. And it about 33% of the country’s gross domestic product. If we talk about the Indian retail market, till now the organized sector dominates and the unorganized sector accounts for 94% of total sales. About 4 crore people are facing unemployment in these areas.
Before allowing 100% investment in this sector, the government has to think and resolve . If 4 or 5 Dhanna companies will be given employment instead of these 4 crore people, who will benefit the country more ? If the company then shops may have to cover their bags.
How to save your startup from FDI
If you want to save your company then go for Indian investment. Many Indian are rich and have the potential to invest. We have to find a solution to find these people and can convince them to invest in Indian Startups. Then only How FDI made Indian startups foreign will change.
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