The government on Wednesday said that Chinese investment in microblogging app Koo was as per the existing regulations and the app has been developed indigenously.
Replying to a question on if the government was aware of Chinese investment in the parent firm of Koo, Minister of State for Electronics and Information Technology Sanjay Dhotre said that under the extant FDI policy of government, 100 per cent investment through automatic route was allowed for IT companies till notification of Press Note 3 of Department for Promotion of Industry and Internal Trade (DPIIT), dated April 17, 2020.
"As per Press Note No 3 of DPIIT, FDI Policy Section, Para 3.1.1(a) states that "A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route"," the minister said in a written reply to the Lok Sabha.
He said the app was developed by an Indian IT company prior to this notification by DPIIT.
The Ministry of Electronics and Information Technology had launched Digital India AatmaNirbhar App Innovation Challenge on July 2, 2020. The challenge was open for participation by Indian entrepreneurs and startups only.
Koo app was shortlisted as an awardee for the said challenge under the social media category as it was an eligible participant to be classified as domestic company as per the extant FDI policy.
"As per the details provided by the company that has developed the app, it has been indigenously developed and app data is completely stored in India in its servers located in Mumbai. Being an Indian company with operations within the country, it has to adhere to all the existing data privacy and security regulations of the government," Dhotre said.
China-based Shunwei Capital held stake in Bombinate Technologies, the parent company of Vokal and Koo. However, Shunwei Capital's stake of a little over 9 per cent has now been acquired by new and existing investors of Koo in its latest funding round.
Some of the known names who have invested in the company include former Indian cricketer Javagal Srinath, BookMyShow founder Ashish Hemrajani, Udaan co-founder Sujeet Kumar, Flipkart CEO Kalyan Krishnamurthy and Zerodha founder Nikhil Kamath.
Also read: Chinese co exits Koo's parent company