Saturday, January 16, 2021

Why India Will Be A ‘Very Big Loser’ If Steps Like Chinese App Ban Continue?

The vociferation to boycott Chinese mobile apps seems to have become the new way to sensationalize nationalism in the country. India, on 25 November further banned 43 Chinese apps which according to the government, are a threat to the country’s sovereignty and integrity. This takes the count to 267. 

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Although these steps of banning Chinese apps have received a thumbs-up from a large section of Indians, this could have serious ramifications on the geopolitical and economic side of the already lopsided India-China relationship. 

The Chinese government, in response to this continuous ban on the apps, has already expressed sharp reservations. In the most recent statement, Beijing opposed the Indian government’s repeated use of “national security” as an excuse to derail the otherwise smooth trade relations between the two countries. China further has warned India of serious trade repercussions if this step-motherly treatment towards the Chinese apps continues in the country. 

File:Indian Prime Minister Narendra Modi and Chinese Prime Minister Xi Jinping before the start of the expanded format meeting of the Shanghai Cooperation Organisation Council of Heads of State.jpg - Wikimedia Commons

But are these threats from China something that India should be worried about? If numbers are anything to go by, then the trade figures rather give us some reasons to worry though. India’s trade deficit with China stands at a mammoth $50 billion. China’s $70-billion export to India is a mere 3% of its total exports and 14% of our imports, reiterating India’s lopsided dependence on China. 

Further, crucial sectors such as pharma, auto, textile are hugely dependent on China for their finished products. If China retaliates to India’s continuous barbs, it could affect 67% of India’s drug imports and 60 % of India’s electronic imports phenomenally, and the impact could be much worse in times such as now. While the step to ban Chinese apps seems to be well-intentioned, it may not necessarily have the desired impact as banning some Chinese apps in India would barely scratch the surface of China’s stake in the Indian economy. 

On the contrary, if China imposes any such boycott in the Indian tech space, it could seriously hurt India given 2/3rd of the Indian tech unicorns have a huge amount of Chinese investment into them. Further, the banning of apps has also suspended talks with Chinese companies, resulting in a huge loss in long-term investments in India, including a $1-billion investment from Byte Dance, one of the companies, whose app has been banned in India.

The move to restrict Chinese expansionism in India may be seen as a necessary step, but to do so by boycotting Chinese products, apps and substituting them with ‘Made in India’ ones is overly optimistic in short term.

The government should instead take a calibrated approach, build in capacity, bring in investments and develop domestic economic zones and take the road towards becoming a mature economy in the long term. This should be driven by ground-level policy interventions, which can help India healthily navigate global competition, especially from China. 

India’s global rank in parameters such as ‘enforcement of contracts’ and ‘registering property’ is dismal at 163 and 154, which means it has a long way to go till it can match and compete with China in the business. 

In the post-Covid19 world, where everything is going digital, India holds a sweet spot. With a population of more than a billion, more than 600 million internet users, and most importantly a democratic form of governance, India has the opportunity to play a major role in the new data-driven digital world order.

However, for that to happen, India should resist the temptation of becoming another China with its curtailment steps and thrive to become a democratic alternative to the Communist regime.

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