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China cites harsh business environment as a result of I-T searches on Chinese companies
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China cites harsh business environment as a result of I-T searches on Chinese companies

China cites harsh business environment after I-T searches on Chinese firms

Global Times reported that the Indian government should protect the legitimate rights of Indian firms. Chinese analysts called for protection as New Delhi launched an investigation into multiple Chinese companies regarding tax and income issues.

The Chinese firms’ operations are still normal at the moment. However, relevant companies are trying reassure their Indian employees because the investigation has raised some questions.

Although the investigation is still ongoing, some Chinese experts reaffirmed on Thursday that India’s business environment is difficult for all foreign companies.

They also pointed out that India’s “non-market” factors will have large, unpredictable effects on them, causing many problems. This is why many Western companies have already left India, according to the report.

They advised Chinese firms to be cautious about investing in India and doing business there. They also recommended that they strictly adhere to Indian laws. Authorities could take legal action against such companies if they chose to stay in India.

The tax department searched more than 20 premises in Mumbai, Rajkot, Karnataka and the National Capital Region (NCR) that were linked to Oppo or Xiaomi on Thursday. The tax department also searched the offices of OnePlus, a Chinese company that has merged with Oppo but still operates as a separate brand.

“India’s tax laws have become very complex. In recent years, many Indian companies, as well as some joint venture entities, have been investigated for tax issues,” Qian Feng (director of the research section at the National Strategy Institute, Tsinghua University) said.

Although it seems that the latest investigation was motivated mainly by economic reasons the possibility of a politically-motivated impact still exists. There are extreme anti China forces within the government and they will be looking at matters related Chinese firms in India with an discriminatory attitude, Qian stated, according to the report.

Lin Minwang, a professor at Fudan University’s Institute of International Studies in Shanghai, said to the Global Times that the investigation was not surprising. This is because the Indian authorities, particularly those in some local governments don’t care what Chinese firms feel. They are pushing for ‘decoupling China’ and see Chinese firms as perfect targets. They also don’t care what Chinese investors think about the business environment in China.

A spokesperson for Xiaomi stated that the company is committed to complying with Indian laws in a statement sent to Global Times on Thursday. We are fully cooperating in India with the authorities to ensure that they have all the information we need as an invested partner.

Their contract manufacturers were also subjected to searches, along with Chinese vendors. Foxconn indicated that it is investigating the matter.

(Only headline and photo of this report might have been reworked slightly by Business Standard staff; the rest is auto-generated from syndicated feeds.

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