In April 2020, India modified its foreign investment policy that expects Chinese investors who have invested billions of dollars into Indian startups to take permission from New Delhi before they provide funds to Indian firms.
India, the world’s second-largest internet market has banned a dozen Chinese mobile apps in the fiscal year 2020. Since a border dispute in June 2020, India’s alliance with China has been in tatters. The majority of the Indians determined to stop the utilization of goods and services made in China. Due to the following, the Chinese tech industry had to suffer a decline in the Indian market. Under Section 69A of the Information Technology Act, access to 43 Chinese mobile apps was revoked by the Indian users. The Ministry of Electronics and Information Technology has announced the order for preventing the access of these apps by the Indian users based on the extensive reports obtained from the Indian Cyber Crime Coordination Center.
The initial Chinese apps that were banned include Baidu, Baidu Express Edition, Tencent Watchlist, FaceU, WeChat Reading, Shein, Ludo All-Star, Alipay, and Tencent Weiyun. AliExpress, a popular shopping website was also banned which resulted in a major market collapse to the Chinese e-commerce segment. TikTok, owned by ByteDance made a profit of INR 3.4 crore in the previous fiscal year. With the largest user base, approximately 120 million has also been banned and endured a loss of $6 billion. However, the ban did not result in pay-cuts for Chinese employees.
On the other hand, a legal notice from the All India Online Vendor Association (AIOVA) stated, another Chinese shopping website, Club Factory informed the sellers about the postponement of the settlement of their unfinished dues until the ban was lifted. In April 2020, India modified its foreign investment policy that expects Chinese investors who have invested billions of dollars into Indian startups to take permission from New Delhi before they provide funds to Indian firms. This decision was taken to reduce Chinese investors in the Indian startup market.
The action of boycotting the Chinese apps was due to the engagement in activities which hindered the national security of India. The order was provoked by national security concerns emerging from China’s data-sharing law that obliges companies of Chinese origin to distribute the data received by them with Chinese intelligence agencies. These apps receive a user’s confidential details such as Aaadhaar/PAN card number, income tax details, and others. Hence, the ban on Chinese apps, an inspection of fintech firms are all a part of the Indian government’s plan to divide the Indian economy from China. The Indian government has banned nearly 267 Chinese mobile apps which resulted in a reduced workforce in the country.
Ji Rong, the spokesperson for China’s embassy in India quoted, “We firmly oppose the Indian side’s repeated use of ‘national security’ as an excuse to prohibit some mobile apps with a Chinese background”.
“In an integrated manner, all the apps combined (the previous 59 apps followed by 47 more and 118 yesterday) are estimated to have been earning a direct revenue of over $200 million per year from India. While PUBG [Mobile] does not share any country-wise numbers, as per our estimate the revenue could be $80 million to $100 million a year from Indian gamers. This revenue could vary based on the number of active users,” stated Pavel Naiya, Senior Analyst, Counterpoint Research.
Meanwhile, apart from the ban on Chinese apps, the Indian E-commerce market is anticipated to rise to US$ 200 billion by 2026. The continuous digital transformation in the country is foreseen to expand India’s total internet user base to 829 million by 2021.
Source: Business World