How will the Indo-China stand-off impact all the Indian start-ups in which Chinese companies have invested in a big way?

While both China and India need to trade with one another, there is also a larger FDI angle to it. Of course, India has become tougher in curbing the flows of any kind of FDI or FII flows from China. China may not rank among the top FDI sources for India but FDI flows from Mauritius and Singapore could actually be backed by Chinese companies.

China has a deep connect with Indian unicorns. Most of the large IT unicorns like Paytm, Swiggy, Snapdeal, Ola, Zomato and Hike have large investment participation from China. It would be very difficult for the Indian government to wish away this start-up funding reality. Curbs on China could put brakes on this very important market for Indian entrepreneurs.

It is therefore time to sit across the table and talk. Two of the largest consumer markets in the world cannot be at loggerheads. In an economic tit-for-tat, there are no winners. India’s fiscal deficit is above 5% and the lockdown has put the economy under pressure. There are diplomatic solutions to such issues rather than grandstanding. Hopefully, that should work.