India has attracted over $40 billion in foreign direct investment (FDI) from the US, after the latest funding spree from major tech giants, such as Google and Facebook, according to a US-based business advocacy group.
American companies have boosted investment in India despite the coronavirus pandemic, the president of the US-India Strategic and Partnership Forum (USISPF), Mukesh Aghi, has said. According to his data, in recent weeks alone, the nation secured over $20 billion in funds, including those from Silicon Valley behemoths as well as investors from the Middle East, among other regions.
American companies invest billions in India
“Year to date investment from the US, including the recent ones, is over $40 billion,” the head of the USISPF, which keeps track of the major US FDIs in India, said, as cited by media. “Investors’ confidence in India is high. India still remains a very promising market for the global investors.”
Earlier this week, Google announced that it will pile $4.5 billion into India’s Jio Platforms, part of the nation’s most highly-valued company, controlled by Asia’s richest man, Mukesh Ambani. Facebook invested $5.7 billion for a 9.99 percent stake in the company in April. In total, investors have bought over $20 billion-worth of shares in Jio Platforms.
The tech giant’s investment to the South Asian country could be a signal that trust in China is falling, while “India becomes a big competitor,” White House Economic Advisor, Larry Kudlow, said. However, it is fair to note the US investments in the Chinese economy have also been on the rise. According to China’s Ministry of Commerce, FDI from the US to China rose six percent in the first half of 2020, compared to the same period last year.
American companies invest in India as an alternative to China
The rising interest of American tech giants in India comes as tensions continue to rise between Washington and Beijing. At the same time, the recent deadly clash at their disputed border in the Himalayas soured India-China relations, resulting in New Delhi’s ban of dozens of Chinese apps, its tightening of controls on imports from the country and a possible ban on Huawei from its 5G networks.
“It is harder and harder to do business with China,” said Mark Lemley, director of Stanford University’s program in law, science and technology. “There is also a growing sense that doing business with China involves troubling moral compromises.”
US distrust of Chinese tech continues to grow. President Donald Trump last week claimed credit for thwarting the expansion plans of Chinese tech company Huawei, and his administration has said it is “looking at” banning hugely popular short-form video app TikTok, owned by China’s ByteDance.
However, India is believed to have long been trying to cash in on the trade tensions between the world’s two biggest economies. Earlier reports signaled that New Delhi was busy creating a framework that will attract global investors looking to shift manufacturing from China.
From Silicon Valley to Silicon Wadi
Since the start of 2020, the biggest names in US tech have invested around $17 billion in India.
Amazon (AMZN) pledged $1 billion in January, Facebook (FB) invested nearly $6 billion in late April and Google (GOOGL) topped them all last week with a $10 billion commitment. They’re part of a wave of investment into India’s tech industry this year that’s now well over $20 billion, with most of it coming from the United States.
The CEOs of Microsoft & Google are Indian.
India trains high skilled tech talent for Silicon Valley… India losses a lot of this talent to America.
But India also uses their access to earn $100 Billion in Software exports.
No screams on Patriotism, they found value..
— William (@_SirWilliam_) July 17, 2020
The magnitude and sources of those investments would have seemed highly unlikely, if not outright unthinkable, just months ago when all those technology companies were on a collision course with Indian regulators and tech CEOs were getting the cold shoulder on visits to New Delhi.
A lot has changed since then. The coronavirus has ripped through the global economy, hitting India particularly hard. India’s diplomatic spat with China has spilled over into tech, aligning it with the Trump administration’s own distrust of Chinese companies. And while India has always been a big draw for US tech firms, the diminishing scope for tech cooperation with China and new threats to their foothold in places such as Hong Kong are giving new importance to the Indian market.
But the flood of investment also highlights something that has now been true for years: India’s digital economy, with more than 700 million internet users and roughly half a billion yet to come online, is simply too big a prize for Big Tech to ignore for long.
“People have confidence that, long term, India is going to be a good market, that long term, its regulations are going to be fair and transparent enough,” said Jay Gullish, who heads tech policy at the advocacy group US-India Business Council. “I think these are just … deepening roots that already exist.”
GVS News Desk with additional input by RT and other sources