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Saturday, December 5, 2020

Geopolitical Repercussions of India’s Ban On Chinese Apps

Amid tensions at Indo-China border over the Galwan Valley, India banned 59 Chinese apps in June 2020

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Smita Malwe
Smita Malwe
Smita is a communication enthusiast and a seasoned PR professional. She is a keen follower of Business, Technology, Politics, Healthcare; always ready to pen down engaging stories.

India. NewDelhi. Chinese applications have dominated India’s digital space for a long time. Digital companies based out of China expanded their footprints across India at a great pace. From hardware and gadgets to various applications, China’s dominance is significant in people’s lives in India. To counter this dominance, India’s ‘Digital Strike’ resulted in the ban of 59 Chinese apps by the Indian government.

Chinese Investment in Indian unicorns. India expressed its concerns over privacy threats regarding user data and possibilities of data security breaches The Chinese app TikTok has a large userbase in India. Despite this, India contributes to merely 10% of TikTok’s global revenue. Considering the larger stake of Chinese investors in Indian companies, banning these apps hardly scrapes the surface of China’s share in the Indian economy.

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Notably, many Chinese technology firms, investors and venture capital players acquired a significant or major stake in Indian unicorns and other companies. Paytm, India’s leading digital payment company, poses an investment of around $222 million from Chinese E-commerce giant Alibaba Ventures. Indian Cab aggregator Ola secured an investment of more than $450 million from Chinese investors like Tencent and Sailing Capital. Other Indian unicorns like Swiggy, Zomato, and Policy Bazar also have significant Chinese investment.

Trade barriers. To control China from distress buying of Indian companies, India recently mandated the routing of foreign investments through the government. This move is aimed at regulating the investments received from all the countries sharing land borders with India, including China. As a retaliatory action due to the ongoing border conflict with China, India banned Chinese applications. This action was taken after considering the possible threat these apps pose for India’s sovereignty and safety.

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China’s growing dominance in the Indian market and investment in Indian enterprises has been a prime concern for the Indian government. In the wake of the increasing demand for electronic hardware and gadgets, India is expected to ramp up its domestic manufacturing capacity. India’s dependence on China for procuring hardware components like Printed Circuit Boards (PCBs), memory devises, processors, microprocessors are distressing for the government.

China retaliates on India’s move. China has blamed India for its actions, claiming a violation of World Trade Organization (WTO) rules. It pointed out India’s discriminatory approach towards certain apps based no clear grounds. China raised the concern over lack of transparency and protocols followed by India. The neighbouring country also blamed India for violating the General Agreement on Trade & Tariff (GATT) and not following the rules of international trade.

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Following India, The US considering ban of Chinese apps. Mike Pompeo, US Secretary of State, indicated on Monday a move towards revising trade policies against China. He spoke about economic damage to the United States. Pompeo firmly stated that the US now needs to take a different path to deal with China. The US is certainly looking at banning Chinese apps which includes TikTok- a Chinese video social networking app.

The United States and France have supported India’s move on banning the apps. Hence, it is unlikely that India will face any economic sanction.

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