China’s brilliance as a preferred investment destination is rapidly fading, not without the keen assistance of its government. India is perfectly situated to take advantage.
Xi and the CCP Act as if Short on Trouble
China’s economy is facing troubling times as the country needs to quickly find a way to deal with the popping bubble that its infamously pumped up real estate sector has turned into. At the same time, China’s manufacturing is endangered by the blackouts caused by an ongoing energy crisis.
President Xi Jinping and the Chinese Communnist Party seemingly should be trying to help the country’s tech industry which is responsible for nearly 40 percent of the nation’s GDP. Instead, it looks like the Chinese ruling party has endeavored to kneecap the IT sector with $1.5 trillion already lost in stock market value by China’s largest internet players.
News about Beijing’s crackdown on the sector have been prolific for a year now, starting with the last-minute suspension of digital finance platform Ant Group’s $34 billion initial public offering (IPO) that happened virtually on the eve of the IPO last November.
Harsh new restrictions on online gaming and private tutoring were imposed and cryptocurrencies were altogether banned. New legislation was adopted concerning data collection and use and strict new anti-monopoly rules were introduced. Tech giants were not spared, Ant Group was ordered to split its business into payment and personal finance divisions, DiDi Chuxing ride-hailing company received a ban to accept new users, food delivery operator Meituan was fined $1 billion for anticompetitive conduct, and founders of TikTok, JD.com, and Pinduoduo chose to flee into early retirement.
Capital Redirecting to India
As investors are looking for opportunities elsewhere, India emerges as a major alternative, especially for venture capital. In June, Chinese startups enjoyed a total of $17.3 billion of investments with the figure abruptly shrinking to $4.8 billion in July. At the same time, Indian startups were injected with nearly $8 billion in July, while receiving only $1.6 billion in June.
The based in New York Tiger Global Management and Japan’s SoftBank Group are some of the most prominent examples of large players closing positions in China and redirecting their investments to India. The picture with publicly listed equity is no different, with the BSE SENSEX going up 26 percent for the first 9 month of the year, while the CSI 300 Index tracking 300 large Chinese firms has gone down 6 percent over the same timeframe.
The Indian Market is not to be Missed Out on
The Indian market is not short of attractiveness with its projected 950 million mobile users by 2023 which make it the second biggest digital market globally. India’s population is expected to exceed China’s by 2026, while Bharat demographics are quite young. The demonetization of 2016 was backed up by the Covid-19 pandemic and technological innovations such as the Unified Payments Interface (UPI), and now digital payments are taking over. Data traffic and time spent on smartphones have also accelerated greatly, increasing the need of serving this digital population.
A good example is the desi online real money gaming and fantasy sports markets, as the two sectors were estimated by KPMG at ₹4,980 crore and ₹2,430 crore respectively for the Financial Year of 2021. The international financial advisors project the Indian online casino and other RMG market to grow 23 percent to ₹6,130 crore by FY 2025, while revenues from online fantasy sports to increase with an impressive 123.5 percent to ₹5,430 crore over the same period.
At the same time, as a report by ENV.Media researchers points out, India’s most popular betting market of state-organized paperback and online lotteries has been estimated to bring between ₹35,000 crore and ₹50,000 crore to public finances every year. Besides this, approximately 10 lakh people are earning their living in connection to the country’s lottery sector, as distribution and retail of tickets is usually through state appointed agents and their individual resellers. Notably, online lottery in India rarely means true digital lottery, but rather “…a retailer assisted lottery ticket being sold at the retailer but controlled through a central server by the concerned state government,” according to the explanation of the CEO of Sugal & Damani, one of India’s major lottery ticket distribution agents.
“Besides being an important revenue stream, if regulated well – and on a national level – lotteries have shown their potential to meet public welfare objectives and generate local employment,” according to ENV. Media’s experts. This makes lotteries an important tool that could help prepare the country for the current accelerating flow of investment capital.