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ETtech Evening Briefing on Feb 22, 2021: Chinese investments return to India, and other top tech news


Good evening,

Nine months after it effectively froze all investment money from China, India has started to clear some of the “smaller cases”. But big investments from the neighbour remain on hold for now.

And as Australian lawmakers prepare to pass a law that would require Google and Facebook to pay for news content there, we look at four ways India could make Big Tech pay for news.

Chinese money starts to trickle back in

As tempers cool along the Line of Actual Control between India and China with the ongoing de-escalation exercise, the Indian government has started to gradually clear foreign direct investment (FDI) proposals from China after a nine-month freeze.

Baby steps: Over the past few weeks the government has started giving approvals to “smaller cases”,
The Times of India reported, adding that large proposals will be taken up later, after a careful analysis of the situation.

  • To help smoothen the process, the government has set up a coordination committee comprising officers from the home, foreign, and commerce & industry ministries and NITI Aayog, the report said.

Back story: India had clamped down on Chinese investments after the border clashes last year. In April 2020, India
brought into effect rules requiring investments from countries with which the country shares a border to be cleared directly by the government, rather than the earlier automatic approval route.

This made it harder for local firms to receive financing from Chinese investors, as FDI proposals with even minuscule Chinese holding would require government approval.

ET had earlier reported that over a hundred investment applications, primarily from Chinese-origin investors looking to pump capital into the Indian startup ecosystem, have been
stuck in a regulatory quagmire.

Fundraising challenges: In October we reported that more than 50 early- and mid-stage companies with relatively high exposure to Chinese money were
struggling to convert their fundraising conversations with global investors into capital commitments.

Why it matters: Chinese investors had become a mainstay in India’s startup ecosystem, having deployed $6 billion over the previous two years. But India’s top startup unicorns, including Zomato, BigBasket and Dream11, have been in talks to cut back their exposure to Chinese investors.

  • Alibaba’s sister company, Ant Group, which holds 25% in Zomato, had committed to investing $150 million in January 2020. However, Zomato has been able to access only $50 million so far. The food delivery startup roped in two new investors later.
  • Dream Sports, the operator of Dream11, Fan Code and Dream Pay, is looking to get funding by way of a secondary share sale that will provide an exit to early-stage investors, including China’s Tencent Holdings. Last month, ET reported that Tata Group’s plan to acquire BigBasket will provide a full exit to Chinese e-commerce giant Alibaba.

Greener pastures: Indian startups had begun moving away from Chinese investors to meet their funding needs, going back to US and European investors who had for long been their mainstay before the Chinese capital made its entry a few years ago.

  • Last week, digital lending startup KreditBee secured an investment of $75 million from the likes of Azim Premji’s PremjiInvest and South Korea’s Mirae Asset Venture. As part of the deal, its China-backed investors either partially or completely left the company.

Also Read:
India is set to clear 45 investment proposals from China

How India can start making Big Tech pay for news

Australian prime minister Scott Morrison recently
spoke to his Indian counterpart Narendra Modi on making Big tech firms pay for news. Some reports suggest an international coalition of Australia, India, the UK and France may be an option for taking on Big Tech. However, India is the only country where no official effort has been made so far to tackle this issue.

Why it matters: Australia’s move to push Big Tech firms to pay for news has invited two very different responses. While Google signed a three-year deal with Rupert Murdoch’s News Corp to buy its news products for Google News Showcase, Facebook has blocked publishers and people from sharing news content on its platform in Australia.

India’s options: To safeguard the rights of news publishers, the government has four cards up its sleeve, according to experts ET spoke to.

  1. The Centre can look at a statutory licensing provision under Section 31D of the Copyright Act. Under this provision, the authority has the power to decide the licensing fee for content in various media. Experts feel that there is a precedent available in this provision, allowing the government to regulate.
  2. Most experts feel the Competition Commission of India is the most suitable regulator. CCI should study the impact on the market by analysing the relationship between platforms and news publishers and should take corrective action if findings are found to be adverse. CCI can suo moto order an investigation, too.
  3. Some experts recommend GoI immediately set the ball rolling by calling first for a 30-45 day consultation and seeking inputs from all stakeholders – platforms, large and small publishers, and end users.
  4. Some experts are in favour of India setting up a digital agency to deal with this and other Big Tech issues. It could have wide powers, like Trai has in telecom.

Supreme Court issues notices on Amazon’s plea


The Supreme Court has
issued notices on Amazon’s plea for interim relief against a high court order which had allowed the Rs 24,713 crore RIL-Future deal to proceed and restrained the National Company Law Tribunal (NCLT) from passing any final orders on the amalgamation.

Recap: Amazon had challenged

‘s bid to sell its business to Reliance for Rs 24,713 crore, arguing that it breaches agreements Future signed with it in 2019. It has already won an international arbitration in Singapore on this and has also moved the high court seeking action against Future’s Kishore Biyani for violating an agreement which barred it from dealing with RIL in any manner.

Meanwhile, three years before it debuted in India in 2013, Amazon circulated an investment proposal, code-named ‘Red’, to
a few select potential local partners for a retailing venture.
Read the full story here.

Also Read:
No need for frequent policy change: Amazon India chief

ETtech Done Deals


Vedantu has completed its first acquisition in the edtech space even as larger peers Byju’s and Unacademy have been on a purchasing spree. The online learning platform
has acquired
Instasolv, a doubt-solving app for Class 6-12 students covering science, mathematics, IIT-JEE, and National Eligibility cum Entrance Test (NEET).


MyShubhLife, a lending app operated by Datasigns Technologies, has
raised $4 million in a funding round led by Singapore-based Patamar Capital with participation from some of its existing investors. The app, previously known as Shubh Loans, offers loans and saving products such as insurance, systematic investment plans (SIPs), e-gold, and e-filing taxes.

Draft guidelines for influencer ads

The Advertising Standards Council of India (ASCI)
has released draft guidelines for advertising by influencers on Facebook, Twitter and other social media platforms. It said the guidelines were meant to help consumers easily recognise promotional content on digital platforms.

  • Posts on Instagram should have a disclosure labelling the title above images or beginning of the text. If only the image is seen, the image itself must include the label.
  • For Facebook posts, ‘influencer’ posts should include the disclosure label in the title of the entry or post and if only the image or video is seen, the image or video must include the label ‘FB story’.
  • Twitter posts need to include the disclosure label or tag at the beginning of the body of the message as a tag. Similar guidelines have been drafted for posts on YouTube, Pinterest, Vlog and Snapchat.

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