App ban will backfire on tech sector
India’s move against Chinese firms will hurt start-ups, deter investment
Analysts said that the Indian government’s ban on 59 apps developed by Chinese companies will hurt India’s technology and internet start-ups as they lose Chinese investment.
On Monday, India announced it would ban the apps over national security concerns. “The compilation of these data, its mining and profiling by elements hostile to national security and defense of India, which ultimately impinges upon the sovereignty and integrity of India, is a matter of very deep and immediate concern which requires emergency measures,” read the statement, which came after the latest standoff between China and India.
China is very concerned about the move and is verifying the situation, Foreign Ministry spokesperson Zhao Lijian told a press conference on Tuesday, adding that the Indian government has a responsibility to safeguard the legal rights and interests of Chinese firms.
Practical bilateral cooperation has been mutually beneficial, but is now suffering manmade damage, which does not conform to India’s own interests, Zhao noted.
Sha Jun, executive partner at the India Investment Services Center of the Yingke Law Firm, told the Global Times on Tuesday that the Indian government’s behavior was “too childish and emotional” and “a very bad signal for further Chinese investment in India.”
Chinese technology companies are betting big on India’s rising technology scene, so reducing their influence will be difficult. Their support for Indian start-ups has brought money, cuttingedge technologies and experience in scaling up businesses.
Most of India’s 30 unicorns (start-ups with valuations of over $1 billion) have Chinese investors, according to Mumbai-based think-tank Gateway House.
Even if targeting Chinese-backed apps affects Chinese companies in India
– despite their optimism toward the emerging market and its lucrative demographic dividend – the ban will damage Indian start-ups, analysts warned.
ByteDance’s TikTok, for which India is the biggest overseas market, is among the banned apps. The app had been downloaded more than 600 million times in India as of April 29, or about 30 percent of its global downloads, according to Sensor Tower.
“TikTok continues to comply with all data privacy and security requirements under Indian law and has not shared any information of our users in India with any foreign government, including the Chinese government,” read a Tuesday statement from Nikhil Gandhi, head of TikTok India.