The ongoing military and diplomatic tension between India and China has cast a shadow on the Chinese fintech giant Ant Group’s investments in India.
According to the latest media reports the Alibaba-backed company is considering selling its 30% stake in Indian digital payment startup Paytm. The spokespersons for both Ant and Paytm have dismissed the report.
Paytm was valued at US$16 billion during its latest fundraising round a year ago and hence Ant’s stake is worth approximately $4.8 billion. It is India’s most valued startup and other prominent investors include Japan’s SoftBank Group.
Alibaba Group has been going slow on India investments ever since the Narendra Modi government amended the foreign direct investments rules for China and other countries that share a land border with India. It made government clearance mandatory for such investments. India had brought in this rule as it feared a Chinese takeover of Indian companies facing financial stress due to the Covid-19-induced slowdown.
The Chinese conglomerate has invested more than $2 billion in India since 2015 through its subsidiaries Alibaba Capital Partners and Ant Group. Apart from Paytm, other beneficiaries include Zomato, Snapdeal, Bigbasket, Xpressbees and others.
Last month, Ant Group’s initial public offering was frozen for failing to comply with the Chinese government’s new regulations, which came into effect on November 1. Ant Group was set to debut in the Shanghai and Hong Kong markets, and the listing was expected to rake in $37 billion, exceeding Saudi Aramco’s record $29.4 billion.
The escalation of military tension between the two countries in June, resulting in the death of 20 Indian soldiers, further aggravated the investment climate. As a retaliatory measure, India tightened rules for investments from China and banned dozens of mobile apps owned by Chinese firms including tech giants such as Tencent, Alibaba and ByteDance.
India has so far banned over 200 such apps – 59 on June 29, 118 on September 2 and 43 last month. They include apps such as TikTok and PubG, which were hugely popular among the country’s youth.