In a bid to curb the menace of Chinese firms misusing the Indian law, market and system and ensure there is no security breach, the Narendra Modi government has taken several steps in the recent past.
Working tirelessly on the leads given by the Ministry of Home affairs, top sources in the government shared that be it the Income Tax department or the Enforcement Directorate, DG GST Intelligence and DRI are working together and taking strict action against various violations by Chinese firms.
The ministry, through various agencies, received information about Chinese companies involved in various violations, sources said.
Several other departments such as RBI and Department of Commerce are also probing the intelligence inputs shared by various agencies to keep a strong vigil.
Investigating agencies have conducted search and seizure operations at various Chinese firms over alleged involvement in violations of Indian laws.
Sample this, in the past one year, three agencies — Income Tax, DRI and Enforcement Directorate (ED) — have conducted raids at several Chinese companies from across sectors such as mobile manufacturers, telecom equipment manufacturers etc.
In almost half a dozen cases, earlier the Income Tax department, and off late even the ED, have conducted raids for alleged violations at companies like Huawei, ZTE, Xiaomi, Oppo, Vivo, and One Plus.
This week, the Directorate of Revenue Intelligence (DRI) conducted searches at the premises of mobile company Oppo India and unearthed a customs duty evasion of Rs 4,389 crore, according to an official statement on Wednesday. Oppo India is a subsidiary company of China-based Guangdong Oppo Mobile Telecommunications Corporation Ltd.
Similarly, in April this year, funds worth over Rs 5,551 crore of Chinese mobile manufacturing company Xiaomi India were “seized” for violating the Indian foreign exchange law, the Enforcement Directorate claimed.
Last year in August, the Income Tax Department raided the Gurgaon-based office and residences of senior executives of ZTE, a Chinese telecom equipment manufacturer.
Tax sleuths raided five premises, including corporate office, residence of foreign director, residence of company secretary, accounts person and the cash handler of a foreign subsidiary company in India.
Four months post this, Income Tax sleuths raided a few other Chinese mobile phone manufacturing companies. According to sources, the department conducted searches on Oppo, Xiaomi and One Plus.
With searches at more than two dozen premises, spread across the country, including Noida, Kolkata, Guwahati, Indore, the I-T Department unearthed several incriminating evidences.
Then, it was in February again when the department came into action based on international investigation and conducted raids on premises of Huawei, alleging serious tax evasion.
News reports say the raids were conducted at multiple locations in New Delhi, Gurugram, Haryana, and Bengaluru in Karnataka.
Following the I-T investigation, the Enforcement Directorate (ED) raided at least 44 places across the country this month against Vivo in a case of money-laundering. The searches were carried out under sections of the Prevention of Money Laundering Act (PMLA) in Delhi, Uttar Pradesh, Meghalaya and Maharashtra.
However, apart from keeping an eye on violations, there is much more the government is trying to keep the neighbour in check since the Galwan Valley face-off.
Domination of Chinese phones biggest challenge
The biggest concern for the government is Chinese companies dominating the mobile phone sector in India since almost all companies make their phones in China and India has been trying to lure the firms to shift their manufacturing to the country.
According to the investigating agencies, some of the mobile manufacturing companies are involved in evading taxes and violating Indian laws.
The recent action on Chinese mobile companies is one such example. But except Samsung and Nokia, almost all other major mobile manufacturing players have a Chinese link.
Removing domination of Chinese companies from the mobile phone market is close to impossible, experts have reportedly shared with top government officials.
More than 300 Chinese Apps banned
In yet another bold step, the government has been constantly banning Chinese apps that allegedly violate various Indian norms. In February this year, the government decided to ban 54 additional apps of Chinese origin, highlighting that they pose a “threat to India’s security” as the border tensions continue.
Most of these were replicas of apps that were banned by the government post the Galwan Valley clash but had re-branded and re-launched in India quietly.
With the addition of 54 more banned apps, the total reaches around 324, which includes the famous Tik Tok and PUBG (older version) which was forced to collaborate with companies based out of China due to the ban in India.
Action against substandard toys from China
Apart from mobile phones, the toys 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 is exhibiting a declining trend, both from China and the world.
In order to restrict the import of substandard toys, the government issued the Toys (Quality Control) Order, 2020, on February 25, 2020, through which toys have been brought under compulsory Bureau of Indian Standards (BIS) certification with effect from January 1, 2021.
Reducing import of electronic items
The government has also taken steps to curb supply of electronic items from China — yet another area that sees the neighbour’s domination. These poor quality items carry limited warranty in comparison to those coming from other parts of the world.
“Government has taken strategic steps and initiatives to expand the electronics manufacturing sector in the country and make India a global electronics manufacturing hub. As a consequence, the dependence on imports of Chinese/other countries electronic goods will go down significantly,” the government had told Parliament.
Anti-Dumping duty on Chinese products
The Commerce Ministry, along with the revenue department, has imposed anti-dumping duties on various Chinese products.
The government imposes this duty to curb specific items from causing injury to the domestic industry and make the Indian market open for fair competition.
According to the government: “The Central Government (Department of Revenue, Ministry of Finance), on the basis of the recommendations of the Directorate General of Trade Remedies (DGTR), Department of Commerce, has imposed anti-dumping duty for five years on five Chinese products recently namely certain flat rolled products of aluminium, sodium hydrosulphite, silicone sealant, hydrofluorocarbon (HFC) component R-32 and hydrofluorocarbon blends.”
Apart from the above five products, DGTR had also recommended imposition of anti-dumping duty on other products originating in or exported from China in 2021-22.
Reducing dependency on Chinese companies in telecom
With cyber security as top priority, the government has also taken stringent steps to safeguard this sector.
Telecom Service Providers (TSPs) procure and deploy telecom equipment from vendors based on their techno-commercial interests, provided they adhere to the security provisions given in the licence.
According to the government, telecom companies are reducing dependency on Chinese firms ZTE and Huawei, noting several security concerns.
Such steps point to the fact that the Narendra Modi government has been adopting a dual approach in dealing with China.
Through various ministries, the government is pushing for ‘Make in India’ and tracking alleged illegal practices of Chinese companies. On the other hand, investigating agencies are raiding various Chinese firms allegedly involved in violating laws.
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