(Image source from: chinamoneynetwork.com)

Chinese investors are worried and unsure about India’s Foreign Direct Investment policy ever since the Indian Government has changed its rules of investments with foreign countries.

According to investors, there is an impact on the funds. A few investors want flexibility in the investments. They have mentioned that if this situation doesn’t get flexible, they would look forward to shifting their focus to other economies.

A few investors have withdrawn term sheets as they are waiting for an update from the government on altering the policy.

According to ET, in Asia’s third largest economy, the investors have their deals at local offices and venture capital firms such as Shunwei Capital, Fosun RZ Capital, CDH Investments, Hillhouse Capital and Morningside Ventures. Right here they have their largest purveyors of capital.

In the last two years, Chinese has invested around USD 6 billion into India’s digital ecosystem to grow better although they have well-known VCs from their side and they receive a good lumpsum of amount from big firms like Alibaba Group and Tencent Holdings. Talking a little about the background of these companies, they have invested a lot of money in India’s startups like Paytm, Ola, Byju’s and Dream11.

When these Chinese venture capital firms were asked about their investment in these startups, they didn’t want to comment on anything until they get a clarity from India’s policymakers.

According to one of the senior executives who is at a Chinese VC fund in India quoted “There are more questions than answers at this point…A few investors have already rolled back their term sheets because of the uncertainties. How do we pitch deals to our LPs (Limited Partners) or our investment committees?”

According to KMCG Their barrier on funds came into the picture in Q1 of 2020 when VC’s financing in Indian startups reached around USD 2.2 billion.

By Neha Makhija