Alibaba is among other Chinese investors who have pulled the brakes on new investments in Indian startups after changes in foreign direct investment (FDI) rules that made prior government approval mandatory for investments from countries that share a land border with India.

Reuters first reported on the development on Wednesday, quoting sources.

Alibaba didn’t respond to an email query.

Zomato, which had raised $150 million capital from Ant Financial, a unit of Chinese internet giant Alibaba, in January raised around $62 million from MacRitchie Investments, a unit of Singapore’s state investment arm Temasek Holdings this month. After the first tranche of about $50 million came from Ant in January, the remainder got delayed due to the government restrictions.

In fact, Ant Group, which is preparing for an initial public offering (IPO) mentioned the challenges it faces in India this week.

In its IPO filing, Ant said a change in FDI rules in India had led to a further evaluation of the timing of its further investment in Zomato.

Chinese investors had invested $166 million in startups in India between January and July compared with $197 million in the year-ago period, data from Venture Intelligence showed. Chinese investors had put in a total of $641 million in Indian startups last year.

The drop in investments follows the stricter government rules around foreign investments from neighbouring countries that came into force in April. The change was mainly aimed at restricting investments from China.

The investment head of a large Chinese investor had recently told Mint that he will not invest further in India until there is more clarity.

In May, Mint had reported that Alibaba-backed BigBasket was in the market to raise $200 million from new investors.

According to the new Hurun India Top Unicorn Investors 2020 report released on Wednesday, China’s Alibaba and Tencent are at 8th and 11th positions, having invested in 4 and 3 unicorns, respectively, while venture capital fund Sequoia Capital India and Japan’s SoftBank are the top two investors in Indian startups unicorns,

Alibaba has backed Paytm, Paytm Mall, Zomato and BigBasket via its Singapore office, Tencent has invested in Byju’s, Swiggy and fantasy gaming company Dream11 – which recently won the title sponsor rights for the IPL cricket.

Interestingly, Mint had reported in August, 2019 that Alibaba is temporarily halting fresh investments in the country as the Chinese investment giant was reviewing its India strategy. It was planning to mainly planning to manage the existing portfolio and not scout for new deals.