ED probe exposes Chinese apps and startups sending thousands of crores outside India

After China tried to drive into Indian territory across the LAC in Galvan during the peak of the pandemic, Chinese firms have been caught in the crossfire. Be it video platform Tik Tok, e-tailer AliExpress, and popular game PubG, which were banned, or smartphone manufacturers that came under scrutiny, Chinese entities have been probed over data security and money laundering as well.

Almost three years later, the revelation about a Bengaluru-based edtech firm's Chinese ownership has highlighted how thousands of crores from India are being routed to the neighbouring country.

Chinese presence in India's startup hub

• After finding that a startup in Bengaluru called Oda Class is wholly owned and controlled by a Chinese citizen Liu Can, the Enforcement Directorate has initiated a probe against it.

• The startup which has educated seven lakh kids after coming into existence during the pandemic, has sent remittances worth Rs 82 crore to China, disguised as marketing expenses according to ED.

• Oda Class is suspected to be one of many businesses where Chinese individuals use forged documents to set up shop in India, and make themselves dummy owners to circumvent regulations.

• Apart from Oda Class, police in Kolkata arrested four people for allegedly sending Rs 45 crore as part of a remittance fraud to China and other South-East Asian countries.

• As of September 2022, the ED had found that more than 100 apps had repatriated more than Rs 1,300 crore generated via betting scams alone to China.

Smartphone makers and apps under the scanner

• As Chinese apps and firms being used for scams are popping up sporadically across India, major smartphone maker Xiaomi also faced action by ED.

• The authorities seized the firm's assets worth $725 million in India, after finding that it illegally sent remittances to China through foreign entities, despite manufacturing devices locally.

• After the Chinese loan app scam was unearthed, leading to crores being frozen in Paytm and Razorpay as well, chartered accountants are also being probed by the Institute of Chartered Accountants of India (ICAI) over their involvement.

Internal security also a major concern

• The Indian government has also flagged the threat to India's internal security, with Chinese citizens getting access to India's economy and user data via shady companies.

• Amidst these concerns, Xiaomi has already replaced Manu Jain, its India head, with a Chinese face, and Realme is expected to follow suit after Madhav stepped down.

• On the other hand, Chinese tycoon Jack Ma's Ant Group is planning to sell off its stake in Indian e-payment portal Paytm.