Chinese firms, used to being atop the internet food chain in Asia, have fallen from their perch in India because of Beijing’s diplomatic stumbles—and U.S. firms are looking to climb on.

Google said Monday that it will set up a $10 billion fund to invest in India over the next five to seven years, including investments in other companies, to speed up adoption of digital services. The news comes after India banned 59 Chinese mobile apps recently, following a clash along the two countries’ border that killed 20 Indian soldiers….