Poonam Sharma
India’s economic autonomy is being quietly attacked—this time not in terms of military face-offs or computer intrusions, but through the backdoor of investment. The most recent outcry involves a new proposal that would permit Chinese firms to invest as much as 24% in Indian stock exchanges and select firms. What was superficially Foreign Direct Investment (FDI) is being viewed increasingly as strategic economic penetration.
Whereas India had made a dramatic protest against Chinese technology giants in the past by prohibiting more than 200 apps following the Galwan conflict in 2020, the story goes contradictory in 2025. Chinese entities, masquerading as investors, are finding their way into the Indian market through financial channels—after fintech platforms, now tech startups, and even firms related to sensitive infrastructure.
The “Tejas Moment” That Never Got Media Attention
One of the greatest surprises is the way that India’s media has failed to report a recent milestone development—India’s Tejas aircraft conference—highlighting indigenous defense technology. Ironically, all this while a shadow game is being played where China-backed plans are being floated in government corridors, including the NITI Aayog, industrial policy departments, and finance ministries.
It asks some very critical questions: Why are we rolling out the red carpet for Chinese capital and neglecting our own innovations? Why do foreign-origin ideas receive speedier clearance than native breakthroughs?
The Political Undertones: Is This UPA 3.0 by Proxy?
A deeper layer below the economic game is political. Critics say that leftover bureaucrats and policymakers from the UPA regime are orchestrating a softer approach to China. There are even claims that this is a backdoor revival of the Congress-style appeasement where strategic caution is bartered off for short-term capital flows.
Rumors abound of some individuals in the planning apparatus propelling pro-China initiatives, such as joining Indian fintech communities, electronic manufacturing parks, and even data-sharing networks. This, when viewed against the backdrop of recent Chinese initiatives in African and ASEAN economies, should jingle loud alarm bells.
From Ban to Embrace: India’s Contradictory China Policy
The Modi government had first stood firm against China’s aggression, banning apps such as TikTok, WeChat, and PUBG Mobile, and cutting off hardware deals with state-linked Chinese players. But now, there are huge Chinese conglomerates discovering alternative paths—by acquiring minority stakes in Indian start-ups, buying voting rights through Singapore- or Mauritius-based shell companies, or entering through tie-ups with Indian companies that are starved for money.
That prompts some very important questions:
Is 24% truly “minority” if it encompasses voting and data rights?
Can we rely on firms that end up reporting to Beijing, where national intelligence acts require data to be shared with the Communist Party?
Are we opening up our digital and economic infrastructure to long-term foreign control?
Security at Stake: It’s More Than Just Capital
Behind economics lurks a grimmer concern: national security. Several of the firms that are trying to get a toehold in India’s financial system are also players in defense technology, cyber security, and AI surveillance systems. A 24% stake, while non-controlling, enables access to boardrooms, financial information, and strategic vision.
One example is that of a Chinese-funded company that proposed investing in a fintech firm handling government contracts. The Defence Ministry and Home Ministry raised flags, citing fears of backdoor monitoring as well as abuse of information. Yet some government departments and planning agencies still insist on relaxation in the interests of “ease of doing business.”
India’s Response: Caution or Capitulation?
There is obviously a fissure in the Indian establishment. Strategically hawkish are those who caution against “economic colonization” through stealth. Financial technocrats on the other side promote open-door policy for capital inflow, regardless of origin. The issue is not FDI—India requires it—but its source, purpose, and design.
While countries such as the U.S. and Australia have put China’s investments under stricter scrutiny, India stands at risk of becoming a soft target if caution is relaxed. The danger was already signaled in the 2010s when telecommunications infrastructure and mobile markets were swamped by Chinese brands. It had taken India five years to reclaim ground—do we wish to relive it?
The Startup Dilemma: Innovation vs. Invasion
India’s fintech, AI, and clean tech startup ecosystem is flourishing. However, founders short on funds, with limited help from local VCs, tend to look towards Chinese money hidden behind benign offshore companies. This creates a paradox—our most innovative concepts could be financed and ultimately held by a country that overtly dismisses Indian sovereignty.
Further, Chinese companies are eyeing Tier-2 and Tier-3 towns, with poor digital literacy and data lying exposed. They are creating a digital map of India through facial recognition software, lending apps, and data-mining platforms—without even opening a single shop.
The Way Forward: Strategic Investment Policy
India desperately needs a Strategic Investment Review Mechanism, similar to CFIUS in America, to screen all foreign investment proposals not only from a financial point of view, but also from the angle of national interest and security.
Major suggestions:
Every investment from nations with hostile relations needs multi-agency scrutiny.
No tech or data-driven company should permit voting rights to foreign players irrespective of equity size.
Startups taking foreign money have to reveal ultimate beneficial ownership openly.
Ministries need to work together better—Defense, Home, Commerce, and IT—so that there are no loopholes left to be exploited.
Time to Be Bold, Again
India’s bold act in 2020 put out a powerful message to the world: Security is above capital. But five years on, cracks are beginning to show. If we let economic choices be influenced by short-term financial lures, we risk being held hostage by strategic blackmail.
As India is emerging as a global manufacturing and tech hub, let us recall—no foreign money is worth sacrificing our sovereignty. The Chinese dragon does not always roar—it is often silent, quietly purchasing entry into our future. It’s time India listens intently—and roars back.
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