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India Inc’s China units face brunt of geopolitics

Experts suggest that Indian IT providers that service global MNCs in China maybe at risk of losing those projects, which will impact the investments made by these companies in the Chinese market.

Updated: Jul 01, 2020 04:45 IST

By Romita Majumdar, Livemint

Indian tech companies with a Chinese presence find themselves facing new uncertainties amid rising geopolitical tensions between Indian and China. (Bloomberg)

Barely two months after resuming operations in China, Indian tech companies with a Chinese presence find themselves facing new uncertainties amid rising geopolitical tensions between Indian and China.

Experts suggest that Indian IT providers that service global MNCs in China maybe at risk of losing those projects, which will impact the investments made by these companies in the Chinese market.

Such concerns have arisen as India is seeing a strong anti-China sentiment culminating in the government announcing a temporary ban on a host of Chinese apps on Monday evening. Actions by the Indian authorities could lead to retaliatory measures by Chinese counterparts.

Indian IT companies have been eyeing the Chinese market as part of their strategy to reduce dependence on tapping the Chinese market to the US and UK, which together make up over 70% of Indian IT exports. The current hostile environment is expected to affect such plans. Last year, the IT industry body Nasscom had launched the third phase of the Sino-Indian Digital Collaboration Plaza, an initiative to bring Indian IT companies and Chinese enterprises closer to each other on a single AI enabled platform. According to Nasscom estimates from 2019, Chinese IT services spend was more than $35 billion, of which India’s share was around $500 million. Now, websites for all three phases are inaccessible.



According to data from the Shanghai Indian Consulate, Shanghai gets the maximum Indian investments while housing companies like TCS, Infosys and NIIT Technologies. Regions of Zhejiang and Jiangsu house manufacturing units of Mahindra & Mahindra, Tata Jaguar Land Rover, Sundaram Fasteners and Dr Reddy’s Laboratories among many others. Nasscom as well as the IT companies did not respond to queries on any measures they are taking to safeguard their Chinese operations. After China ended its Covid-19 lockdown in early April, Indian businesses that were affected elsewhere globally were able to start operations in China. According to data from Gartner research, Indian IT services providers such as Infosys, Wipro, TCS have multi-location footprint (including Beijing, Shanghai) in China. The average employee strength may vary between 1000 to 5000 employees for each of the leading service providers.

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