Why biggest US tech companies are investing billions in India

Why biggest US tech companies are investing billions in India
Microsoft CEO Satya Nadella with Mukesh Ambani during the Microsoft Future Decoded Summit on February 24, 2020 in Mumbai, India. Source: Getty Images
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Daily US Times: Since the start of 2020, the big and well known US tech companies have invested around $17 billion in India.

US tech companies like Facebook (FB) invested nearly $6 billion in late April, Amazon (AMZN) pledged $1 billion in January and Google (GOOGL) topped them all last week with a $10 billion commitment. These tech giants are 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 magnitude of the amount and sources of those investments to India 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.

Since then, a lot has changed. The coronavirus pandemic has ripped through the global economy, hitting India particularly hard. India’s diplomatic spat with neighboring 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 aim for US tech firms, the diminishing scope for tech cooperation with China and new threats to their foothold in places, like 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 is huge with more than 700 million internet users. Roughly half a billion yet to come online. The situation is simply too big a prize for Big Tech to ignore for long.

More than 700 million people in India have internet access. Source: Getty Images

Jay Gullish, who heads tech policy at the advocacy group US-India Business Council, said: “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.”

“I think these are just … deepening roots that already exist,” he said.

The China factor

For years, Silicon Valley has been largely shut out of China, thanks in part to the country’s massive censorship mechanism dubbed the Great Firewall. And a controversial new national security law imposed in Hong Kong, where Facebook and Google’s services are still accessible due to its relatively unfettered internet, could push them further away.

India’s tech companies are growing fast. Source: CB Insights report

The law gives Hong Kong authorities sweeping power to regulate tech platforms, including restricting access to their services and ordering them to take down posts that threaten China’s national security. Google, Facebook and Twitter have said they will stop sharing data with the Hong Kong government, while TikTok has exited the city completely.

Mark Lemley, director of Stanford University’s program in law, science and technology, said: “It is harder and harder to do business with China. There is also a growing sense that doing business with China involves troubling moral compromises.”

US distrust of Chinese tech companies continue to grow. Last week, President Donald Trump claimed credit for thwarting the expansion plans of Chinese tech company Huawei, one of the biggest telecom equipment manufacturers in the world, and his administration has said it is “looking at” banning hugely popular short-form video app TikTok, owned by China’s ByteDance.

It’s a step that would only further align the US with India. Last month, the Indian government also banned TikTok, which is hugely popular in the country, and dozens of Chinese apps. The government took the initiative after a border clash between the two countries that left 20 Indian soldiers dead. The government took the step amid huge calls for a boycott of Chinese products. And though India’s tech relationship with China still runs deep — most of India’s biggest startups have sizable Chinese investment, Chinese smartphones dominate the Indian market — the recent tensions could strengthen India’s longstanding tech ties with the US.

Source: Istimewa

Ravi Shankar Chaturvedi, research director at Tufts University’s Institute for Business in the Global Context, ‍said: ”India and its Southeast Asian neighbors have tried to balance the two powers by forging greater economic ties with China while holding on to the security umbrella provided by the United States.”

“China, through recent actions, has effectively delivered the US to India for a generation.”

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