Faced with the strategy of stopping physical goods, which could be questioned by China at the World Trade Organization, this focus on the technology sector is seen as one that could be more effective from New Delhi’s perspective.
In its exercise of coercive diplomacy with China amid the tense clash in Ladakh, the government has picked up, for now, an article of low name: mobile apps, given its limited impact on Indian companies, but which has a disproportionately large presence in the mass consumption segment.
The ban on 59 Chinese cantilevered mobile apps is both a declaration of intent and a strong signal. This may not harm India, given the alternatives in the app space, but for China, India’s app market is growing and valuable.
Even more so because the Internet costs here are one of the lowest in the world, and consumers total more than 800 million. Almost half of these smartphone users are under the age of 25 and hungry for content on their devices.
This is probably the first major action that affects Chinese business interests in India. Two months ago, in April, the Department for the Promotion of Industry and Internal Trade made it mandatory for foreign direct investment from neighboring countries to receive prior approval from the government.
This also aimed to curb opportunistic acquisitions/acquisitions of Indian companies during the times of the Covid-19 pandemic, when valuations were at new lows.
Faced with the strategy of stopping physical goods, which could be challenged by China at the World Trade Organization, this approach in the technology sector is seen as one that could be more effective from New Delhi’s perspective.
The ban on physical goods will also have a negative impact on India’s business and economy, while it will hardly affect that of China.
However, this may only be the first step on what could be a ladder. Just 10 days ago, the fact check identifier from the Press Information Bureau on Twitter had denied that the government had banned some apps from being available in app stores.
This was in response to a bogus order saying that Chinese apps like CamScanner, Tik Tok, Clash of Kings and a dozen others had been banned.
While FDI approval rules were amended citing concerns over hostile acquisitions, analysts tracking Chinese investments said it would make it harder for Chinese tech giants like Tencent and Alibaba to invest in Indian IT companies.
During 2015-19, Chinese investors, including Alibaba, Tencent, TR Capital, and Hillhouse Capital, have invested more than $ 5.5 billion in Indian startups, according to Venture Intelligence which tracks private equity, venture capital transactions and valuations, mergers, and acquisitions, in India.
In fact, Venture Intelligence data shows that at least 16 of the 29 unicorns (startups valued at more than $ 1 billion now) have at least one Chinese investor.
As India became part of world trade, it did not really develop any specific policy focused on China, said a former Secretary of Commerce. “Our policy was reduced to anti-dumping duties, safeguards, and trade barriers,” he said. However, the government has now begun to look for specific policies in at least some sectors, such as mobile manufacturing, active pharmaceutical ingredients, and medical devices, he said.
Currently, TikTok is the most downloaded mobile application in India, with more than 120 million active users, and it is considered to be shaping new youth culture, especially in the interior of the country.
Operated by tech giant ByteDance, the app allows users to create short videos and overlay vocals or music and surpassed 2 billion downloads globally in April, according to market intelligence firm SensorTower, Inc., based in San Francisco.
According to the firm, around 30 percent of TikTok downloads come from India, even when India’s share of the app’s revenue and earnings is less than in the local market in China and the US.
However, TikTok was in a clear expansion mode in India, adding to its staff strength and regional momentum, according to RoC presentations made by ByteDance in recent months.
Along with TikTok, banned apps include WeChat, a messaging app, and Weibo, a Chinese social network similar to Twitter.
Between 2012 and 2018, the time an Indian spent watching online videos increased from an average of about 2 minutes per day to over 50 minutes per day, according to a report by the Zenith media agency, which is owned by Publicis.
While Google-owned YouTube has more users in India than TikTok, analysts see TikTok as having more potential in terms of content customization and overall influence.
TikTok’s relentless push into the hinterland of India is evidenced by the fact that the Chinese app supports more than 15 Indian languages, allowing regional talent to be honed in a highly personalized way.
According to SensorTower data, India has been the largest driver of TikTok installations, generating 611 million lifetime downloads to date, or 30.3 percent of the total.
China is the number 2 country in facilities, accumulating 196.6 million to date, or 9.7 percent of all downloads, for its version of the application, known as Douyin. This figure does not include third-party Android store facilities in the country.
The United States completes the top three countries for downloads, where it has registered 165 million installations or 8.2 percent of the total.
TikTok was blocked in India once before, when in May 2019, in the run-up to the general election, the government banned the app’s downloads for two weeks after the Madras High Court ruled that it could expose children in the application to graphic content or predators
TikTok had appealed and the court subsequently reversed its ruling. This time, however, the ban could be there to stay.
She is a freelance blogger, writer, and speaker, and writes for various entertainment magazines.