‘Stealth investment’: Chinese money finds its way into Indian tech as IPOs boom

India’s tech scene is flourishing after Covid-19 lockdowns led to greater use of digital services, with investors pouring US$10 billion into start-ups this year

While investors such as Softbank dominate, Chinese investors are also returning via Hong Kong, despite New Delhi’s FDI rules and deteriorating bilateral relations

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Delivery riders for Zomato and Swiggy, two Indian start-ups, wait to collect orders outside a restaurant in Mumbai. Photo: Bloomberg

Published: 12:00pm, 4 Aug 2021Updated: 8:33pm, 4 Aug 2021

With Chinese investors facing rules restricting their participation in Indian companies, players in India’s flourishing tech scene have turned to Japanese conglomerate Softbank and other Western investors to fill the void.

The value of venture deals in India rose to US$7.9 billion in July, according to data by research firm Preqin. But venture capital (VC) investments from mainland China plunged from US$1.2 billion in 2018 to just US$76 million in the first six months of 2021, data research firm Venture Intelligence found.

Meanwhile, US investors such as New York-headquartered Tiger Global have sealed over two dozen deals this year.

Softbank contributed about one-fifth of the US$10 billion in fresh funding that investors poured into Indian start-ups in 2021, according to data analytics firm Global Data, giving rise to new unicorns – privately held companies worth US$1 billion or more.

Softbank’s US$2 billion infusion into India this year has gone to a mix of start-ups, from food delivery firms to fintech players to the online insurance marketplace, as the country’s tech industry boomed after Covid-19 lockdowns fuelled greater use of digital services.

“The times are unprecedented in the amount of capital available,” said Yashish Dahiya, CEO of the online insurance marketplace Policybazaar, which is backed by Softbank and has just filed for an initial public offering (IPO) that could raise as much as 60.18 billion rupees (US$809 million).

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