New direction in India-China economic relationship

By Niranjan Sahoo
0 Comment(s)Print E-mail, February 20, 2016
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Start-up boom

While the structural hurdles to greater economic integration are still intact, there are positive news emerging from the most talked about start-ups sector. India which boasts to have the third largest start-ups (42000) in the world with newbie like Snapdeal, Flipkart, Paytm taking the e-commerce market by storm, a number of Chinese investors have found it easy to put their money in this growing sector. Considering India's e-commerce and internet start-ups journey resemble a lot like that of China (especially Alibaba and Ctrip), giants such as Alibaba, Ctrip, Tencent Holdings from China have announced big plans to invest in promising start-ups.

For instance, Baidu, the Beijing based internet giant, is in talk with Zomato, a Delhi based restaurant search start-up, and BookMyShow, a Mumbai based ticket booking company, to provide investment and marketing support. Similarly, Ctrip, China's largest online travel services enterprise, has announced to invest US$180 million in MakeMyTrip, an Indian online travel company. Alibaba Group which pumped UD$680 million last year in Paytm, an Indian e-commerce company, is now in talk with rival Snapdeal for investment. Kuaidi, a Beijing based cab service provider, has announced to fund US$500 million in a cab hailing start-up Ola.

This list is expanding as more and more Chinese majors are making beeline to pour their money in India's start-up boom. In fact, such a sudden surge of investment from China is causing a plenty of heartaches from rival companies from Japan and the USA, which had played critical role in the initial phase of this boom.

The start-up story seems to have some positive effect on the traditional business sector. The surest evidence of this is the spate of announcements from Wanda, China's largest real estate developer, to pour investment worth US$10 billion in Haryana, India's northern state. Similarly, China's car maker SAIC Motor has announced to buy GM's Gujarat facility in recent weeks. There are several investment proposals from Chinese companies that are seeing the day light sooner than expected. Overall, thanks to the start-up boom, the India-China trade wind seems blowing in positive direction.

One would see more positive traction on this soon. Given such a turnaround via start-ups is helping India to bridge the trade gaps, the Narendra Modi's government is making earnest efforts to remove critical trade barriers for more Chinese money. India is actively pursuing to ease visa restrictions for Chinese business and professionals.

Yet, a complete turnaround in two countries' business environment requires much more. Apart from removing structural barriers and signing Free Trade Agreements, both nations need to resolve the longstanding border disputes. Nonetheless, start-ups can act as real building block for larger transformation in trade and economic relationship of two giant neighbors.

Niranjan Sahoo is Senior Fellow, Observer Research Foundation, New Delhi.

Opinion articles reflect the views of their authors, not necessarily those of


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