Trade tussle hots up as India bans Chinese apps

Trade tussle hots up as India bans Chinese apps

The news that India has banned 59 popular Chinese-devised mobile phone apps, including TikTok and WeChat, has initiated a debate on how far the Indian government intends to go in limiting trade with China – and how far it can afford to go.

India has insisted that the apps pose a threat to the country’s security. The country’s Ministry of Electronics and Information Technology has apparently accused the apps collectively of breaching the privacy of Indian users and mining their data.

Equally likely, however, is that the ban is a response to the deaths of 20 Indian soldiers earlier this month in a clash with Chinese forces over a disputed border.

That said, there has been nervousness about the high levels of Chinese investment in India for some while, including, in April, the tightening of foreign investment rules to block what were described as ‘opportunistic takeovers’ of Indian companies left vulnerable by the economic effects of the recent pandemic.

The app ban and the investment bar are not the only problems faced by Chinese companies serving the Indian market. Recent days have also seen long delays in the clearance of Chinese imports at ports and airports.

Of course, Chinese companies do have a strong foothold in India’s consumer and technology markets. The UK’s Financial Times newspaper says that Indian imports from China hit $76 billion in the 2017-2018 financial year and that there was a $63 billion bilateral trade deficit that year, though increased import duties have brought that figure down to $48.7 billion.

However, India’s manufacturing industries, still reeling from the recent lockdown, would suffer badly from a hasty import ban and not all Chinese imports could be replaced locally – let alone replaced cheaply – despite a continuing narrative around Indian self-reliance promoted by the government. It’s noteworthy for instance that local manufacturers of mobile phones and other telecommunications equipment that rely on Chinese components have been frustrated by the import clearance delays.

Could telecommunications infrastructure be next on the banned list? State-run operator BSNL has already been asked to disallow Chinese participation in its 4G tender, but private players may not be as compliant if government requests similar action against would-be 5G vendors – especially as it would limit the choice of operators like Vodafone Idea, whose financial position is seen as particularly difficult.

So far there’s no sign of the government softening its position. In fact, the Indian press says the government has increased a nationwide alert and stepped up monitoring as intelligence agencies prepare for intensified cybersecurity attacks from China. This trade tussle is far from over.

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