India should ensure fair legal treatment for firms in dispute
Published: Jul 10, 2022 11:44 PM
Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

Chinese smartphone maker Vivo's local unit in India has asked an Indian court to quash a decision by the country's financial investigating agency to freeze the company's bank accounts, saying the move was "bad in law" and would harm business operations, according to Reuters. 

India's Enforcement Directorate earlier reportedly seized 4.65 billion rupees ($59 million) of Vivo's assets. The move has caused Vivo not be able to pay statutory dues and employee salaries, Reuters said, citing a filing to the Delhi High Court. Vivo on Tuesday told the Global Times that as a responsible company, Vivo strictly abides by all local laws and regulations in India. As of press time, Vivo has not yet responded to the latest development of the situation.

For Vivo, taking up legal weapons to protect its rights and interests is a forced move to resume normal operations. Although filing a lawsuit must bear a certain cost of time and money, it is the most reasonable choice available to the company.

For Indian financial investigating authorities and courts, as the Vivo case has attracted wide spread attention, it is imperative for them to take efficient, fair and transparent action. If the Indian court does not handle this case fairly or discloses information in a timely manner, it will certainly undermine the authority of the Indian legal system and further damage India's business environment.

In recent years, India's business environment has been continuously questioned. The dispute that Vivo is currently encountering in the Indian market is by no means an isolated case. The tax and financial issues that India used to investigate Vivo this time is a way that the Indian government often uses to regulate or restrict foreign companies. The Indian tax authorities have conducted tax investigations on Shell, Nokia, IBM and many other foreign companies, some of which the Indian authorities lost the law case in the end.

Whether this Vivo incident can be well resolved and whether India's decision has sufficient legal basis have a strong demonstration effect on a vast number of foreign companies. Furthermore, whether the Vivo case can be fairly and efficiently solved by Indian authorities also matters to Chinese companies' confidence on the Indian market.

Since China-India bilateral ties soured in 2020, Chinese companies which have outstanding performance in India have been increasingly become targets of anti-China sentiments. During the latest wave of tax investigations, companies such as Huawei, Xiamo, OPPO, and OnePlus have all reportedly encountered raid and accounts check. This is the largest and most far-reaching systemic crisis that Chinese companies have faced since entering India, according to some analysts.

India's concentrated moves against Chinese companies have attracted attention from Chinese officials. The Indian side should act in line with laws and regulations, and provide a fair and non-discriminatory business environment for Chinese firms, China's Foreign Ministry spokesperson Zhao Lijian said on Wednesday.

For Chinese companies such as Vivo that have long contributed to the Indian economy and operate legally in the local market, legal weapons have become the last line of defense for these companies to continue their business in India. No matter how difficult it is, they should not give up using legal weapons to defend their legitimate rights. If Indian legislation system really fails them, it will be a huge loss to both sides.

Since imposing an approval requirement for foreign investment from countries that share a land border with India in April 2020, which was seen as a move against Chinese companies, India has seen investment from China sharply decline. Chinese enterprises' investment in India dropped last year, according to media reports.

Evidently, the growing China-India trade and investment is of great economic significance for India. In 2006, China and India reportedly signed an agreement on promotion and protection of bilateral investment. Given China's investment potential and India's economic development needs, it is necessary for both sides to take similar moves to explore a more rational and transparent investment mechanism. The Indian side should take more positive measures to promote the growth of bilateral investment, not the other way around.

The author is a reporter with the Global Times.