Invest India, the government's foreign investment promotion programme, is aggressively promoting India to global players as the preferred investment destination. About 42% of the investment proposals under this programme are from China, with total investment roadmap of over $85 million in next five years.

China’s Sany Heavy Industry, a global engineering machinery manufacturers, plans to invest over $9 billion in India, according to the London-based think tank Economist Intelligence Unit (EIU). Other large-cap companies such as Pacific Construction are also looking to invest in the Indian market.

Alibaba, Baidu, Tencent, WeChat, and Xiaomi are some other examples of Chinese companies that have grown to be billion-dollar companies in last few years, and have active interests in India. Besides these large-cap companies, startups such as cycle-sharing firm Mobike and clean air solutions company Kaiterra are some other examples of Chinese startups introducing unique solutions in India market.

“This is primarily because of a slowdown in Chinese economy and saturation of market that restricts scale. Moreover, India has opened up to hosting foreign players here, which presents a very lucrative market for the Chinese players,” said Neil Shah, research director at Counterpoint Research.

The crackdown on P2P lenders in China is also fuelling several startups in this segment to look elsewhere. “Over 110 P2P firms in China failed in the first half of July, of which 50 defaulted on repayments,” said Apoorv Bhatt, a Bangalore-based analyst.

QianBaBa, a Shenzhen-based online lending platform, suspended its operation for cash flow shortage on July 9. The five-year-old firm has cumulatively lent out about $4.9 billion so far. Niubangold, based in Hangzhou City, announced it was unable to pay around USD 15 million to its lenders due to borrowers’ default.

“The Chinese government has been constantly trying to tighten the fin-tech sector, especially after the P2P scam involving Ezubao in 2015. The P2P companies are not allowed to provide security, promise on interest rate or launch large-scale offline promotions. The rules also include a cap on how much an individual can borrow from P2P platforms,” Huang Hu, a China-based angel investor said.

Left to fend in a challenging policy scenario, several of these firms are tapping the India market in order to establish new revenue streams.

A Chinese P2P fintech company Shanghai PPDAI Financial Information Services, which was in Bangalore recently to meet potential partners, is currently exploring opportunities to enter the Indian market.

Finup and CashBus are also in preliminary stages of discussion with Indian entities, while iTouzi and Fenqile are in mid-level talks with potential partners in India.

On the other hand, the Indian startup sector has a lot to learn from Chinese companies, much more than from Silicon Valley of the US. The two markets have similarities in culture, consumer spending behaviour and income levels, as well as problems such as cyber fraud and data protection.

"The biggest benefit Indian players can have from Chinese players is how to handle scale. Most Indian startups are unable to scale up after series A funding. Chinese companies are about 10 years ahead in understanding how to scale up," Shah said.

Despite similarities between the two markets, the Chinese companies have taken a cautious approach to study the market well, before expanding rapidly.

Ofo, for instance, entered India in 2017, but did not start operations immediately. It launched the pilot project in Pune, only in January 2018. The company has now exited the Indian market after testing for feasibility. "We studied the market, we invested here. Our exit is a strategic decision which is in favour of the whole company. The Indian market, per se, is still a lucrative market," said Ofo’s former country manager.

Kaiterra, the clean-air solutions company, has also taken a soft launch approach here. The company has been selling its clean-air products since 2016 in India. But its focus currently is lopsided towards social change. It is engaging with local authorities to study air quality in cities and it is deploying hundreds of monitoring devices across cities, starting with Delhi, to produce actionable insights on how to improve air quality.

News app Toutiao, group-buying service Meituan Dianping and ride-hailing service Didi Chuxing already have significant investments across the news aggregation, food-delivery and ride-sharing segments in India.

Other Chinese companies including Tencent and Walmart-backed social media company Kwai and Tencent-backed e-tailer JD.com are scouting for investments in India as well as exploring options to set up operations here.

Beginning 2016, Chinese companies poured in $2.37 billion in Indian companies, according to research firm Tracxn. Much of the investments from Chinese companies such as Tencent, Alibaba and CTrip into large Indian internet startups such as Flipkart, Paytm and MakeMyTrip have been strategic in nature.

Chinese companies have already captured India's telecom sector. Brands such as Xiaomi, Oppo, Vivo and OnePlus control 51% of India’s over $8 billion smartphone market. While political and geo-political differences continue to threaten relationship between the two nations on a diplomatic level, the innovative and creative startup community is going all out to woo patrons in India market.

Indian investors and companies are also now shifting focus from Silicon Valley to Chinese companies to draw parallels and learn from it. Add to it huge investments from Chinese investors into Indian startups, which is giving them much-needed steel to compete with rivals.