49% citizens say Chinese cos should be allowed to sell products in India only after an undertaking stating no personal or aggregate data is shared with China

July 8, 2020, New Delhi: The Indian Government early last week banned 59 Chinese apps including Tik Tok, Cam Scanner, WeChat etc., in the interest of national security. The ban was imposed under Section 69A of the Information Technology Act, citing privacy & security issues about data of Indian users being transferred to servers outside India without permission.

LocalCircles conducted a survey to understand the citizen sentiments on Indian companies with Chinese investments, Chinese multinationals operating in India and also the impact on small business (Startups, SMEs and Entrepreneurs) if economic ties with China were severed. The survey received over 19,000+ responses from citizens while 3,341 responses were received from small businesses spread across 243 districts of India.

Citizen Survey

Over the last several years, hundreds of Indian companies have raised capital from Chinese investment firms or companies.

Citizens split about action against Indian companies with Chinese investments; Want Chinese Directors in such companies to resign

The first question asked if any actions should be taken against Indian companies with Chinese investment. 30% respondents said action should be taken only if the Chinese ownership is 10% of higher, while 29% said action should be taken on companies with any Chinese ownership. 27% said no action should be taken on such companies but the Chinese Directors must resign. Just 11% said that no action should be taken against any such company. Overall, people seem to be ok with not taking action against Indian companies with Chinese investments but want any Chinese directors to resign from the boards of such companies. It is quite obvious that is a majority investor (generally needed to get a board seat) can’t have their influence on the company, they would rather exit that investment by selling their stake to other interested parties and such a move could lead to stake sale by the Chinese funds and companies. Chinese investment giants like Alibaba Group, Tencent, Steadview Capital and Didi Chuxing dominate investments in over 18 of the 30 Unicorn companies in India. Some of these include Bigbasket, Zomato, Delhivery, Byju’s Flipkart, Make my trip, Paytm, etc.

People were also asked if action should be taken against Chinese manufacturers selling products in high volumes in India. 35% said such sales should be completely barred while 14% said they should only be allowed to sell Made in India products. 25% said such companies should only be allowed to sell made in India products if no data sharing is taking place with China and 20% said all product sales should be allowed for all products if no data sharing is taking place with China and China Directors resign. 4% said all products sales should be allowed if no data sharing with China is taking place. Only 2% said sales should be allowed as is.

49% citizens believe Chinese multinationals should be allowed to sell products in India only if they give an undertaking stating No personal or aggregate data is shared with China

Overall, it appears that 49% believe that if Chinese multinationals are to sell products in India, the personal as well as aggregate data of Indian customers must reside in India and not go abroad to the China head quarters of the company. In India, while personal data protection is to be governed by the Personal Data Protection Bill 2019, the aggregate data is to be governed by the Ecommerce Policy which is still being drafted. However, a temporary undertaking solution could be implemented which prevents any data (sale, operational or processing related) by products and services sold by an Indian corporate entity is retained in India.

Small Business Survey

Over 3000 Indian small businesses (startups, SMEs and entrepreneurs) were also asked if India cuts economic ties with China, what will be the impact on their business in the short term (next year). In response, 7% businesses said that it will have an extremely negative impact while 20% said it will have a somewhat negative effect. 10% said it will have an extremely positive effect while 14% said it will have a somewhat positive effect. 42% said it will have no impact on their business.

Small businesses split on whether India should cut ties with China; 27% say it will have negative impact while 24% say it will have positive impact

This shows that small businesses are split on whether India should cut ties with China or not as 27% are saying it will have negative impact while 24% are saying it will have a positive impact. A large number of Chinese imports are used as raw material for industries such as electrical machinery, pharmaceuticals, fertilisers, chemicals etc. A ban on Chinese imports will hurt all these businesses at a time when they are already struggling to survive in the middle of the economic slowdown and COVID-19 pandemic. Similarly, many startups were in discussions with Chinese investors to raise capital and practically most of those discussions have gone cold now.

Following the June 29 ban, Union Minister for Road Transport and Highways Nitin Gadkari announced on July 1 that Chinese companies would not be allowed to take part in road projects. As per reports, India has also been weighing a 5G ban on Chinese firms.

In the past, China itself has frequently deployed economic sanctions against countries like South Korea, Japan, Philippines. Mongolia etc to get back at them. Recently, in retaliation to India’s ban on 59 Chinese apps in the wake of violent faceoff in the Galwan Valley, the Chinese Govt also targeted India’s WION news channel by blocking the access to its website in China.

Overall, the survey results point out that citizens want the Government to take practical actions like removal of Chinese directors from board of Indian companies or ensure that the Indian citizen data at personal and aggregate level with Chinese multinationals is stored in servers in India instead of going back to Chinese headquarters. On the small business front as well, the split opinion amongst businesses indicates that severing ties does hurt an equal number of businesses as it does help.

LocalCircles will share the findings of this survey with the related central government ministries so the input of citizens and small business can be taken into account as appropriate.