Chinese business groups urge India to stop irregular tax probes, saying move shakes confidence
Published: Dec 26, 2021 01:34 PM
Xiaomi India Photo: VCG

Xiaomi India Photo: VCG

 Two Chinese chambers of commerce in India have urged New Delhi to change its irregular tax probe practice and treat foreign investors equally, and to actively create an open, fair, and non-discriminatory business environment for Chinese enterprises operating in India.

The confidence of a business group that invested $3 billion and created 500,000 local jobs in recent years is shaken, as India launched a broad investigation into Chinese companies.

The Chinese Chamber of Commerce in India and the India China Mobile Phone Enterprise Association, in a statement sent to the Global Times on Sunday, said that Chinese mobile phone companies in India are facing unprecedented difficulties, and as a result of sudden inspections and fines by the Indian authorities, the companies are unable to carry out normal production and operations.

The statement came after Indian tax authorities launched a broad investigation of Chinese-run companies in India. Leading Chinese mobile companies, including Oppo, Xiaomi and OnePlus, with wide exposure in the country, were reportedly involved.

India has also imposed anti-dumping duties on five Chinese products, including certain flat rolled products of aluminum, for five years, according to media reports on Sunday. 

"Their confidence in developing in India is shaken. These practices are not conducive to India's initiative on investment promotion and international economic and trade cooperation," said the statement sent to the Global Times exclusively.

The investigation has not concluded, but some Chinese analysts said that the business environment in India is harsh not only for Chinese firms but all foreign companies. They pointed out that "non-market factors" in India will have large and unpredictable effects and cause many problems and many Western companies have already pulled out of the country for this reason.

Liu Xiaoxue, an associate research fellow at the National Institute of International Strategy of the Chinese Academy of Social Sciences, said that some of the actions taken by the Modi government, such as the handling of visas for Chinese people, clearly show discrimination.

Liu noted that India could not proceed without these companies. Chinese mobile phone companies are essential to India's development. 

Unlike Chinese apps that were banned in 2020, Chinese mobile phone companies are usually heavily localized and their existence is indispensable to some of the Modi government's grand plans, such as making progress in the digital economy and e-commerce.

Chinese-funded mobile phone enterprises have been investing significantly in India since 2015, data shows.

There are more than 200 Chinese manufacturers and more than 500 trading companies in India, with a total investment of more than $3 billion, and these enterprises have created more than 500,000 local jobs, according to the statement.

In a statement posted on its website on Thursday, the Chinese Embassy to India raised concerns about the matter. 

The Chinese government has always required Chinese companies to operate in compliance with laws and regulations overseas and is also committed to safeguarding the legitimate rights and interests of Chinese enterprises and citizens, read the embassy statement.

The hard-won development of China-India economic and trade cooperation is in the common interests of the two peoples, the embassy said.