India's Response to Chinese Efforts to Buy Stakes in Indian Firms

People's Bank of China, the Chinese central bank amid the Covid crisis has increased its shareholding in India's HDFC. Not only in India but it has bought shares of financial institutions and technology firms in most of the countries across the globe during the stock market crash caused by the Coronavirus pandemic. This particular transaction is an official transaction. It is quite possible that a number of such transactions might have been carried out by Chinese firms (real and dummy) and individuals in many Indian firms which are strategically important for India.

There remains no doubt that it would be very difficult for many Indian firms to survive the financial onslaught post Covid and would be prone to hostile takeover by foreign entities. It was also possible that pursuing its own design China might have bought out many Indian firms through backdoor such as firms from tax havens and other allied nations besides the direct share purchases by Chinese nationals and firms. There was a need for policy intervention and thankfully Indian government did that by amending the automatic foreign direct investment rules. It is expected to check and reining in such possibilities.


China has been engaged in its own dirty design for long but since Jan 2020 what it did came to fore when during this Covid pandemic it went on to acquire stakes in important firms (technology and financial) across the globe perhaps to have advantage in the post Covid world to gain some bargaining power.

China has earned a notorious image in the minds of common people and policymakers across the world by buying stocks and misbehaving with African nationals that would force the world to think beyond the present day of globalization and integration process. It is inevitable that these events will have definite impacts in the due course of time. But on the other hand, it will also offer an opportunity to India and by supplying medical help (medicine, equipment and expertise) to more than 60 countries till now across all the continents, India has made some remarkable efforts which must continue.

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