Apps earnings

Decoding India’s two-pronged approach to taming the dragon

In an effort to limit the threat of Chinese companies abusing Indian law, market and system and to ensure that there is no security breach, the Narendra Modi government has taken several measures in a recent past.

Working tirelessly on the leads given by the Home Office, key government sources shared whether it is the Income Tax Department or the Enforcement Directorate, DG GST Intelligence and DRI are working together and take strict measures against various violations by Chinese companies.

The ministry, through various agencies, has received information about Chinese companies involved in various violations, sources said.

Several other departments such as RBI and the Department of Commerce are also probing the intelligence feeds shared by various agencies to maintain strong vigilance.

Investigative agencies have carried out search and seizure operations at various Chinese companies for their alleged involvement in violations of Indian laws.

For example, over the past year, three agencies – Income Tax, DRI and Enforcement Directorate (ED) – have raided several Chinese companies across industries such as mobile phone makers, telecommunications equipment manufacturers, etc.

In nearly half a dozen cases, earlier the income tax department, and later even the ED, conducted raids for alleged violations at companies like Huawei, ZTE, Xiaomi, Oppo , Vivo and OnePlus.

This week, the Directorate of Tax Intelligence (DRI) conducted raids on the premises of mobile phone company Oppo India and uncovered customs evasion of Rs 4,389 crore, according to an official statement on Wednesday. Oppo India is a subsidiary of Chinese company Guangdong Oppo Mobile Telecommunications Corporation Ltd.

Similarly, in April this year, funds worth more than Rs 5,551 crore from Chinese mobile phone manufacturer Xiaomi India were “seized” for breaching India’s foreign exchange law, it said. said the Law Enforcement Branch.

Last year, in August, the income tax department raided the Gurgaon office and residences of senior executives of ZTE, a Chinese telecommunications equipment maker.

Tax sleuths raided five premises, including the head office, the residence of the foreign director, the residence of the company secretary, the accountant and the cash manager of a foreign subsidiary in India.

Four months after that, income tax sleuths raided a few other Chinese mobile phone manufacturing companies. According to sources, the department conducted research on Oppo, Xiaomi and One Plus.

With raids in more than two dozen premises, spread across the country including Noida, Kolkata, Guwahati, Indore, the IT department unearthed several incriminating evidences.

Then, again in February, the department took action on the basis of an international investigation and conducted searches of Huawei’s premises, alleging serious tax evasion.

Reports say the raids were carried out at multiple locations in New Delhi, Gurugram, Haryana and Bengaluru in Karnataka.

Following the computer investigation, the Enforcement Directorate (ED) raided at least 44 locations across the country this month against Vivo in a money laundering case. The searches were carried out under sections of the Prevention of Money Laundering Act (PMLA) in Delhi, Uttar Pradesh, Meghalaya and Maharashtra.

However, in addition to keeping tabs on violations, the government has been trying much harder to keep the neighbor under control since the Galwan Valley showdown.

The dominance of Chinese phones is the biggest challenge

The government’s biggest concern is that Chinese companies are dominating the mobile phone industry in India, as almost all companies manufacture their phones in China and India has tried to induce companies to move their manufacturing to the country.

According to the investigative agencies, some of the mobile phone manufacturing companies are involved in tax evasion and violation of Indian laws.

The recent action against Chinese mobile phone companies is an example. But except for Samsung and Nokia, almost every other major mobile phone maker has a connection to China.

Eliminating the dominance of Chinese companies in the mobile phone market is nearly impossible, experts reportedly shared with senior government officials.

Over 300 Chinese apps banned

In another bold step, the government has consistently banned Chinese apps that violate various Indian standards. In February this year, the government moved to ban 54 more apps of Chinese origin, stressing they posed a “threat to India’s security” as border tensions continue.

Most of them were replicas of apps that were banned by the government after the clash in the Galwan Valley, but quietly rebranded and relaunched in India.

With the addition of 54 other banned apps, the total reaches around 324, including the notorious Tik Tok and PUBG (old version) which were forced to collaborate with companies based outside of China due to the ban in India.

Action Against Substandard Toys From China

Apart from cellphones, the toy sector has also been on the government’s radar. Chinese toys dominate the Indian market mainly due to their low price as they are made of poor quality plastic.

According to the government, the import of toys, games and sports equipment shows a downward trend, both from China and the world.

In order to restrict the importation of substandard toys, the government on February 25, 2020 issued the Toys (Quality Control) Ordinance, 2020, by which toys were made subject to compulsory certification by the Bureau of Indian Standards (BIS) from 1 January. , 2021.

Reduce import of electronic items

The government has also taken steps to curb the supply of electronics items from China – another area that is seeing dominance from the neighbour. These poor quality items have a limited warranty compared to those from other parts of the world.

“The government has taken strategic measures and initiatives to develop the electronics manufacturing sector in the country and establish India as a global center for electronics manufacturing. As a result, reliance on imports of electronics from China/other countries will decrease significantly,” the government had told parliament.

Anti-dumping duties on Chinese products

The Ministry of Commerce, along with the Revenue Department, has imposed anti-dumping duties on various Chinese products.

The government imposes this requirement to prevent specific items from causing harm to the domestic industry and to open up the Indian market to fair competition.

According to the government: “The central government (Directorate of Revenue, Ministry of Finance), based on the recommendations of the Directorate General of Trade Remedies (DGTR), Department of Commerce, imposed an anti-dumping duty for five years on five Chinese products recently, namely certain aluminum flat-rolled products, sodium hydrosulfite, silicone sealant, hydrofluorocarbon (HFC) component R-32 and mixtures of hydrofluorocarbons.

Besides the above five products, DGTR had also recommended the imposition of anti-dumping duties on other products originating in or exported from China in 2021-22.

Reducing dependence on Chinese companies in telecoms

Since cybersecurity is a top priority, the government has also taken strict measures to protect this sector.

Telecommunications Service Providers (TSPs) purchase and deploy telecommunications equipment from vendors based on their technical-commercial interests, provided they comply with the security provisions set out in the license.

According to the government, telecommunications companies are reducing their dependence on Chinese companies ZTE and Huawei, noting several security problems.

Such measures indicate that the Narendra Modi government has adopted a two-pronged approach in its relations with China.

Through various ministries, the government is pushing for “Make in India” and tracking down alleged illegal practices by Chinese companies. On the other hand, investigative agencies are raiding various Chinese companies allegedly involved in breaking the laws.

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