Action on foreign companies mars investment optics

Meanwhile, a clutch of Chinese cell phone operators in India have been facing raids by Indian investigative agencies.

Published: 17th July 2022 07:27 AM  |   Last Updated: 17th July 2022 10:37 AM   |  A+A-

Illustration: Sourav Roy

A desperate Twitter, facing government action for not taking down dozens of ‘suspect’ accounts, has rushed to the Karnataka High Court seeking judicial intervention. Meanwhile, a clutch of Chinese cell phone operators in India have been facing raids by Indian investigative agencies. These moves have once again kindled the debate on the freedom to do business in India by foreign companies.

Social media giant Twitter, with 24 million users in India, was issued notice by the Ministry of Electronics and Information Technology threatening action under Section 69(A) of the Information Technology (IT) Act for not removing 60 or more accounts and tweets of journalists, politicians and other activists.

Twitter’s case is that the ‘takedown’ diktat falls short of the procedural requirements; and that as a ‘intermediary’ social media platform, it cannot ride roughshod over the rights and freedom of expression of its users. It has also pointed out that on national security, obscenity, terrorism and other such issues, it has acted with alacrity and removed more than 46,000 accounts and tweets in recent months.

Union IT minister Ashwini Vaishnaw has justified action against Twitter and others, stating that these companies are answerable to the laws of the land, and that his government was committed to make “social media more accountable”.

The long arm of the law – Sec 69(A) of the IT Act – empowers the government to block digital content in the interests of the sovereignty andsecurity of the state, and safeguarding ‘public order’. However, these powers seem to have been selectively but widely used to cripple opposition movements and snuff outinconvenient criticism. Alt News founder Mohammed Zubair’s incarceration is just the tip of the iceberg. The fact is: India is among the 5 countries last year which accounted for 96% of the global requests made to Twitter for removing content. The others were Japan, Russia, South Korea and Turkey.
Walloping the Chinese

In the case of the Chinese mobile companies, the heat began soon after the border face-off with China in 2020. Companies like Vivo and Xiaomi had been earlier feted as makers of affordable smart phones; and as a sponsor of IPL cricket, Vivo had become quite a household name.

All that has changed. Xiaomi faced investigation and raids by the Enforcement Directorate (ED) in May, this year. The ED has alleged that the company has been making‘illegal’ remittances to its principals in China in the guise of royalty, and more than Rs 5,500 crore had been repatriated. On its part, Xiaomi MD Manu Kumar Jain, in legal filings,has denied wrongdoing, and claimed the company’s officers faced threats and ‘physical violence’ at the hands of the investigative agency.

Two months later, when Twitter was petitioning the Karnataka High Court,Vivo, owned by China’s BBK Electronics, had the ED all over its offices as part of an investigation into suspected money laundering.To add to the excitement, the ED said two of the company’s top officials were missing and had probably “fled the country.”

Beyond the charges of financial misdemeanors, the unstated narrative blames these Chinese tech companies for snooping and misusing their database. In short they have become a security threat. Huawei has been formally blacklisted and cannot bid for 5G telecom spectrum.

We have to wait for what the investigation throws up; but given the current atmosphere and the gamut of rules, it has become very difficult for the Chinese to do business in India. From the point of view of the consumer, it’s a pity. They offered a range of affordable products from smart phones to TV sets, which many of their Western counterparts cannot match.

Exit queues getting longer

All this may win some applause from the West. For US and European governments, China represents an axis with Russia’s new imperialism, and India seems the obvious South Asian bulwark against Chinese expansionism. In the new balance of power, India has an ideal opportunity to seek investment alliances with US and Europe. But that now seems to be going up in smoke.

The slide started a few years ago with the two big UK-headquartered companies – Cairn Energy and Vodafone – being levied capital gains tax in 2020 by retrospectively opening up their merger and acquisition history.  Atleast two international tribunals ruled against the violation of bilateral treaties and directed the Indian government to refund the money.

The promised diplomatic bonhomie with the western democracies has been belied by a string of corporate entities either pulling out, or downsizing operations in India. Swiss cement manufacturer Holcim, Royal Bank of Scotland, and Harley-Davidson have sold their businesses and pulled out.

Citibank has sold some of its businesses and is downsizing. Ford Motor Co and Tesla, both who had big plans for India, have said they have misjudged the market and have put their plans on hold. The list goes on.

The word has got around. The US State Department’s Investment Climate Statement 2021 describes India as “a challenging place to do business.” The taxation rules are seen as ever-changing goal posts. Unfortunately, instead of remedying the perception, the clampdown on Twitter – that violate basic western principles of free expression – will only solidify these concerns.



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  • Sishtla LAKSHMI NARAYANA

    Strange logic by the writer. It appears he is happy with cos investing in india violating the local laws, evade taxes etc and disssppear in thin air.
    2 months ago reply
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