Vital that firms with Chinese investment, for instance, are not the next target as these firms have other investors too.
It is early days yet, but by all accounts, the move to ban 59 popular Chinese apps—like TikTok, ShareIt, UCBrowser, etc—seems to be a well-thought-out move. What is, though, odd is that if some of these apps were clandestinely stealing Indian data, as has been alleged, why were they not banned earlier? Unlike the delays in clearing imports from China, or say an increase in import duties on Chinese imports which hurts Indian importers or manufacturers who use these inputs, the ban on the apps will hurt a lot less. Certainly, a ban on Tik Tok will hurt those artists who have made a career based on Tik Tok videos, but the ban is likely to hurt the Chinese more. Around 30% of Tik Tok’s user-base, according to Reuters Breakingviews which, in turn, cites SensorTower data, comes from India; cutting off this base will hit the valuation of its parent ByteDance. ByteDance is estimated to be worth around $110 billion and also owns Helo whose users are all from India. Bigo Live is a competitor to Tik Tok, a third of its users are Indian and its parent, Bigo, is worth around $2 billion. Similarly, UC Browser has a 12-13% market share of the browser market in India, making it the second-largest way to access the internet after Google’s Chrome.
Now that the action has been taken, however, it is vital to calibrate it. Any move to ‘punish’ China, in the absence of a Balakot-style strike, is almost certainly also aimed at the local audience, an audience which is increasingly baying for blood after the Chinese incursion. To that extent, the ban will help address some of their need for ‘action’ by the government. But, this is a double-edged sword since any move to placate local opinion also runs the danger of stoking the demand for more action. The move to insist that goods be labelled according to their country of origin—on the GEM marketplace of the government as well on e-commerce platforms like Amazon and Flipkart—was, for instance, one that would only have inflamed passions. Apart from the fact that it is difficult to find out what the country of origin is for many products—is a Samsung or an Apple phone ‘made’ in India genuinely Indian if the parts come from overseas, including China?—if it turns out that a large number of products sold online are Chinese in origin, at some point, this can lead to calls for stronger action.
The important thing, after the ban, is to prevent this from deteriorating into a more broad-based action against firms in which there is Chinese investment.
Congress MP Manish Tewari, for instance, has tweeted to suggest favouritism by prime minister Narendra Modi since, as he says Alibaba has not been banned though it is a big investor in PayTM—Alibaba has invested $860 million in Paytm. But should PayTM be targeted, what message does this send out to investors, both Indian and foreign about whether their investments in India are safe? And, what of the tens of thousands of local jobs that have been created as well?
Indeed, as it happens, most of the firms where Chinese firms have invested have other investors as well, like Japan’s SoftBank for instance. The big Chinese investments that come to mind, apart from Alibaba’s investment in Paytm, and $500 million in Snapdeal—along with SoftBank and Foxconn—are Tencent’s $400 million in Ola, $700 million in Flipkart, $175 million in Hike Messenger, and $145 million in Practo. Indeed, a research paper by Gateway House (bit.ly/2ywFwK1) estimates China has invested $4 billion in Indian tech startups, resulting in 18 of India’s top 30 unicorns having Chinese funding. Equally, if the ban is to give Indian app developers a better shot at capturing the market by developing as good or better substitutes, the government policy on startups has to be a lot more encouraging than it is at the moment.