Is India’s latest crackdown on Chinese firms part of plan to decouple from Beijing?

India is now urging law enforcement agencies to employ a coordinated effort in investigating the finances of Chinese companies

Relations between India and China soured soon after a deadly clash between the countries at a disputed Himalayan border area

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Is India’s recent crackdown on Chinese companies part of New Delhi’s strategic decoupling from Beijing? hoto: Shutterstock

Published: 2:00pm, 18 Sep 2022Updated: 2:27pm, 18 Sep 2022

India’s arrest of a man, described as the “mastermind” behind shell companies linked to China, is the most recent sign of New Delhi’s increased pressure campaign on mainland companies in recent months.

The Ministry of Corporate Affairs said on Sunday that the suspect had appointed dummy directors onto the boards of these fraudulent businesses, which were potentially involved in “financial crimes detrimental to the financial security of the country”.

His arrest came after several raids were conducted, including at the Gurgaon offices of Jilian Consultants India Private Ltd, a wholly owned subsidiary of Jilian Hong Kong Ltd.

According to Alex Capri, a research fellow at the Hinrich Foundation, this amplified crackdown is part of India’s strategic decoupling from China, which is becoming increasingly important as Delhi builds its own domestic manufacturing base and asserts itself as a global alternative to China for foreign investments.

“Moving away from an opaque system, where there is room for these shell companies to operate and a lack of enforcement against corruption, and instead being able to say that we are enforcing the rules properly and we have transparent standards is essential for the long-term investment climate India is seeking,” he added.

In August, India began urging law enforcement agencies to employ a coordinated effort in investigating the finances of Chinese companies, prompting allegations of tax evasion and money laundering.

For example, Chinese telecommunications giants, such as Xiaomi and Vivo, which make up a large share of India’s smartphone market, have come under fire over suspected financial irregularities.

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