Zhou Guanhuai [CC BY-SA]

The Indian government has taken into custody a Chinese employee of the smartphone behemoth Vivo. This development is the latest chapter in India’s ongoing efforts to tighten the screws on Chinese corporations operating within its borders. This incident also — needless to say — underscores the increasingly strained economic and political relations between these two Asian powerhouses.

The detained Vivo employee faces a litany of charges. Indian authorities allege that the employee entered the country under false pretences, setting up a network under Chinese control. This network, they argue, compromised India’s economic sovereignty. Accusations also include working without the appropriate visas, violations of employment visa rules, and involvement in money laundering, making this a multifaceted case.

The scrutiny extends beyond the individual to Vivo itself. The Enforcement Directorate (ED) has accused Vivo of masking Chinese control over Indian entities and utilising forged documents for opening bank accounts. According to the ED, Vivo illegally transferred over Rs. 1 lakh crore out of India, thereby contravening Foreign Direct Investment norms. Further, investigations covering Vivo’s financial activities from 2014 to 2020 reveal no profit declaration and no payment of income taxes in India. These allegations additionally compound the legal entanglements of the tech company, which had previously faced complications when a raid on its offices last year exposed evidence of an illegal transfer of Rs. 62,476 crore to China in an attempt to evade Indian taxes.

Additionally, the ED also accused several of Vivo’s employees of concealing identities and violating visa rules by visiting “sensitive” regions of Jammu and Kashmir among other charges.

The ramifications of these actions go beyond legal and financial concerns. These developments signal India’s growing assertiveness in safeguarding its interests and underline the broader geopolitical implications of the rift between these two nations. They carry economic and political repercussions that may reshape the landscape for Chinese companies operating within India. China’s response to these developments remains of utmost significance, as it could impact the trajectory of this diplomatic standoff.

Adding weight to this situation is India’s ban on a slew of Chinese apps, including the immensely popular TikTok. These bans are not merely seen as a regulatory crackdown; instead, they are strategic manoeuvres aimed at exerting pressure on the Chinese government.