China’s announcement on 15 September that Nvidia broke antitrust law is another instance of Beijing weaponising regulations for geopolitical gain. The decision of the country’s market regulator—State Administration for Market Regulation—against the American top chip maker, which had been taken as US-China trade negotiations proceeded in Madrid, illustrated how antitrust enforcement has moved beyond simple market competition issues into economic statecraft.
This episode teaches India an important lesson in the strength of evidence-based regulatory leverage. As global powers increasingly use economic coercion, India finds itself not as the swing power that it desires to be, but as a swung power buffeted by decisions made in Washington and Beijing. The way out lies in building its own instruments of leverage to inflict costs on other countries. Even if there are unintended consequences, as there will surely be, India must be ready with its own retaliatory options. One of which is strategic merger reviews.
SAMR has shown this strategy with quantifiable results. It is an antitrust regulator scrutinising mergers and acquisitions among firms with major operations in China. But it often deploys delays in approval and conditions as geopolitical tools against foreign governments, transforming even routine business deals into diplomatic levers.
The Intel-Tower Semiconductor is the most theatrical example—a $5.4 billion transaction that won the approval of nearly every regulator around the world except SAMR. Intel had to eventually walk away from the buyout, paying Tower Semiconductor a $353 million breakup fee. This was a retaliation for US semiconductor sanctions.
The Broadcom-VMware acquisition is another revealing example. The $69 billion deal was delayed specifically because of Chinese regulatory slowdowns. Final approval only arrived after favourable talks between the then US president Joe Biden and his counterpart, Xi Jinping, and conditions were imposed that assured VMware software would remain compatible for Chinese buyers.
Nevertheless, SAMR’s strategy is not entirely obstructionist. In 2023, as tensions flared high, SAMR cleared high-profile transactions such as Microsoft’s acquisition of Activision Blizzard, illustrating strategic, instead of blanket, resistance, which can be leveraged with credibility intact.
A strategic tool used worldwide
The US led the way with this model by means of the Committee on Foreign Investment in the United States (CFIUS), now a powerful geopolitical instrument. In 2023, more than one-fifth of the transactions cleared by CFIUS needed mitigation conditions, and nine deals were completely abandoned after CFIUS determined no mitigation would be adequate to address national security risks.
CFIUS reviews now range from self-evident defence contractors to apparently innocuous areas such as offshore windfarms and dating sites, consistent with an aggressive definition of national security. Moreover, there has been bipartisan agreement across US administrations on leveraging investment reviews for strategic ends.
The EU has also developed its own stance, demanding, under its Foreign Subsidies Regulation (FSR), a significant amount of information regarding foreign subsidies involved in merger and acquisitions (M&A) deals so that support provided by other jurisdictions can be assessed. This places several pressure points for state-backed parties involved in transactions. Legal commentators observe that these extended powers render review processes less transparent and more subject to geopolitics, but precisely this lack of transparency generates strategic ambiguity that maximises negotiating power.
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India’s leverage points
India has an advantage which even long-standing powers do not have—the world’s highest concentration of Global Capability Centres (GCC). More than 1,800 GCCs indicate not only market presence but also operational entrenchment that produces asymmetric vulnerability for multinational corporations.
They handle not just the back-office operations of Fortune 500 companies, but also have the critical information technology (IT) infrastructure of big banks, and contain research and development (R&D) facilities of technology behemoths ranging from Microsoft to General Electric. Unlike market access denial, disrupting GCC operations threatens immediate business continuity. A 10,000-person engineering campus in Bengaluru handling core product development cannot be relocated within months or even years.
This provides a strong deterrent effect that few other rising economies can match. When an Indian strategic regulator examines a merger between firms with substantial GCC presence, the risk goes beyond losing future access to markets to upsetting fundamental operational infrastructure that cannot be replicated by firms elsewhere.
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How to strategically use CCI?
The Competition Commission of India (CCI) functions with far greater limitations than its global counterparts. The CCI only takes jurisdiction over deals when the set revenue thresholds are reached within India, restricting its control over many strategically critical transactions. In contrast to SAMR or CFIUS, the CCI does not have the mandate to scrutinise deals based on more macro strategic issues outside of conventional competition metrics.
While SAMR can scrutinise any deal where parties have major China operations, irrespective of their nationality, and CFIUS is able to scrutinise any deal potentially impacting US national security, the Indian CCI does its work in very narrow statutory parameters centred on market concentration metrics.
A transformed Indian strategic merger review system would function across various dimensions with well-defined trigger points that include conventional revenue levels as well as GCC operational relevance, strategic sector engagement, and supply chain criticality.
The review process must distinguish between low-concern transactions with allied country acquirers in low-sensitivity sectors with minimal operational presence. Additionally, it should also differentiate between medium-concern transactions with non-allied but friendly jurisdictions in strategic sectors or those with major GCC presence, and high-concern transactions with adversarial jurisdictions in essential sectors with high operational integration. Geopolitical correlation indicators would comprise reciprocity in market access, regulatory treatment, and global trade agreement compliance.
The economic leverage potential is significant. If the US imposed punitive tariffs on Indian IT services, India could retaliate by imposing heightened scrutiny on high-value US tech mergers and requiring assurances regarding GCC operations and technological access. Likewise, Chinese border tensions could delay Chinese acquisition approvals, requiring undertakings on operational transparency.
The model requires careful calibration to avoid deterring beneficial foreign investment. There are risks with this approach as well, the biggest of which is that this tool could be used to coerce domestic firms. Or its use could harmfully expand to achieve multiple objectives of technology transfer, protectionism, and data localisation.
These are valid risks and require further discussion. The key lies in transparency of criteria and proportionality of response—being firm enough to deter misbehaviour while maintaining India’s reputation as a reliable business destination. A legislative route broadening the mandate of the CCI beyond issues of pure competition to encompass strategic interests could be an option to maintain accountability.
China’s move against Nvidia exposes the new laws of great power rivalry in which economic interdependence is used as a weapon. India cannot wait for marketplace or diplomatic niceties but requires institutional mechanisms to enable proportionate responses when global powers take India for granted.
Pranay Kotasthane is deputy director, Takshashila Institution, and co-author of ‘Missing in Action: Why You Should Care About Public Policy’.
Arindam Goswami is a research analyst in the High-Tech Geopolitics Programme at The Takshashila Institution. Views are personal.
(Edited by Saptak Datta)