New Delhi — After June’s deadly border clash in Ladakh, India is waging an economic war on China, with bans on almost everything from popular mobile apps to tenders on public projects.

ByteDance’s TikTok, Tencent’s WeChat, Alibaba’s browser and Baidu map were among 59 Chinese apps banned by the Indian government in late June.

Ravi Shankar Prasad, India’s information technology minister, called it “a digital strike” at a recent political rally.

Another 47 apps that are clones of those already banned were blocked in late July amid reports that over 250 more were on the chopping block, including Tencent-backed online multiplayer battle royale game PUBG Mobile and video-sharing app Zili from smartphone maker Xiaomi.

“These are not just apps but propaganda agencies of the Chinese government,” Ashwani Mahajan, leader of Swadeshi Jagran Manch, the economic wing of the Hindu nationalist social organization Rashtriya Swayamsevak Sangh (RSS), told the Nikkei Asian Review. RSS is the ideological parent of Prime Minister Narendra Modi’s Bharatiya Janata Party.

Mahajan also charged Chinese apps with data theft. “We would request the government to put a bar on Google app store and other places from where these apps can be downloaded,” he said. “Any app that does not comply with Indian laws should not be allowed.”

“While disappointed that I am not able to use TikTok anymore, I am with the government as it’s a matter of national security,” M. Ashish told the Nikkei Asian Review. “It provided me an avenue to showcase my talent, and I had acquired a substantial fan following.” The 35-year-old public sector contractual employee used the platform to share comic clips featuring himself and his family. TikTok had amassed 200 million subscribers in India.

Ashish’s plan now is to use Roposo, India’s answer to TikTok, which has jumped up following the China ban. Other homegrown apps have also prospered.

According to Sensor Tower, an app market intelligence company, Roposo, Xiaomi’s Zili and New York-based Dubsmash saw combined downloads increase by 155% in the three weeks following the blocking of TikTok compared to the preceding three weeks. “These three apps have the highest lifetime downloads out of all TikTok alternatives on India’s App Store and Google Play,” it reported on July 23.

That same day, the government announced restrictions on national security grounds on bidders from China and other countries bordering India for public projects. There have also been media reports that New Delhi will exclude Chinese technology companies like Huawei and ZTE from India’s forthcoming 5G network, and increase tariffs on Chinese-made goods.

Hindu nationalists belonging to Rashtriya Swayamsevak Sangh staged a protest in New Delhi on June 17 after a border clash with China. 

  © Reuters

There have been concerns for some time about Chinese apps being used as propaganda tools. Zhang Yiming, chief executive of TikTok owner ByteDance, promised in 2018 that his company would ensure Chinese Communist Party “voices are broadcast to strength.” TikTok was reported to have ordered its India team to censor content critical of the Chinese government, including all mentions of Tibet and its spiritual leader, the Dalai Lama.

The Open Technology Fund in the U.S. has highlighted the Chinese government’s use of digital propaganda. In a September 2019 report, the fund said an app called Study the Great Nation that was being touted as an educational tool in fact promoted President Xi Jinping’s ideology.

After initially observing that India’s apps ban could be a violation of World Trade Organization rules, China’s response has remained relatively restrained. China’s ambassador to New Delhi, Sun Weidong, tweeted on July 30 that his country advocates win-win cooperation and opposes zero-sum games. “Our economies are highly complementary, interwoven & interdependent,” he said. “Forced decoupling is against the trend & will only lead to a ‘lose-lose’ outcome.”

Sun said China is not “a strategic threat” to India, and noted that the “general structure that we can’t live without each other remain[s] unchanged.”

Analysts say digital technology was certainly a significant win for Beijing previously. According to Gateway House, a Mumbai-based think tank, China used investments in startups over the past five years to penetrate India’s online ecosystem with its popular smartphones and apps, having failed to persuade India to join its Belt and Road Initiative.

India’s Prime Minister Narendra Modi has promoted Make In India and other self-reliance campaigns, but critics say there is little to show for them.

  © Reuters

“Chinese tech investors have put an estimated $4 billion into Indian startups,” the think tank reported, noting that Alibaba, Tencent and ByteDance rival the U.S. penetration of India through Facebook, Amazon and Google. Chinese smartphones such as Oppo and Xiaomi lead the Indian market with an estimated 72% share, well ahead of South Korea’s Samsung and California-based Apple.

Justifying his call for a ban, Mahajan said Chinese products are cheap “because the Chinese government is giving a huge subsidy to kill our manufacturing.” A report submitted to the Indian parliament in 2018 said the Chinese government gives rebates of up to 17% to exporters, effectively making imported Chinese goods 5-6% cheaper than their Indian counterparts.

“This is an economic attack — they are simply doing unfair trade,” Mahajan said. He also said Chinese companies should be excluded from Indian infrastructure projects to prevent them acquiring sensitive data in key locations. Mahajan believes that shunning Chinese products would make India more “aatmanirbhar” — a Hindi term for self-reliance popularized by Modi.

On May 12, Modi announced the Aatmanirbhar India campaign. He unveiled an economic package of 20 trillion rupees ($266 billion) to make the country more self-reliant and to boost domestic production in order to overcome the economic crisis caused by COVID-19. As of August 3, India had confirmed over 1.8 million infections and more than 38,000 deaths. Tens of thousands of migrant laborers had been left jobless.

Prime Minister Narendra Modi’s push for greater economic self-reliance gathered momentum after a border clash with China along the disputed Himalayan border in mid-June. 

  © Reuters

“This vision of India — turning crisis into opportunity — is going to prove equally effective for our resolve of aatmanirbhar or self-reliant India,” Modi said, as he called for more local manufacturing, particularly of medical equipment.

His call for self-reliance gained momentum after tensions in eastern Ladakh along a shared Himalayan border picked up again in early May, leading to a deadly clash in mid-June that left 20 Indian troops dead and an unknown number of Chinese. Diplomacy and talks between the militaries of the two nuclear powers have so far produced little progress.

Rahul Kashyap, a New Delhi-based independent analyst on Sino-India relations, told Nikkei that nationalism is now dominating public discourse, with China replacing Pakistan in the collective psyche as “enemy number one” — a term first applied by Defense Minister George Fernandes in the late 1990s.

Professor N. R. Bhanumurthy of the Delhi-based National Institute of Public Finance and Policy, regards Aatmanirbhar India as “a very long-term policy strategy,” but not an entirely new one given the well established Make in India campaign. “In a sense, it is part of the philosophy of the government that they would like to see India as the engine for global growth, the way China became over a period of 30 years,” he said.

Bhanumurthy does not regard Aatmanirbhar India as a simple import-substitution initiative because the country will continue to procure whatever it still needs from China and other nations. The main idea is to make the country a major exporter of goods in addition to services where it is already competitive internationally.

But to some, Aatmanirbhar India is just another empty slogan following on the heels of Make in India, Stand Up India and Start Up India that critics say barely progressed.

“I think a lot of narrative that is created by the government is more for public consumption and keeping their political base intact — it has nothing to do with the reality,” said Sunil Kumar Sinha, principal economist at Fitch Group’s local unit India Ratings and Research. “We have more than $80 billion of trade with China. Can we simply say one fine day that we stop it and find an alternative? It’s not possible.”

Trade between India and China dropped below $82 billion in the fiscal year that ended in March from $87 billion the previous year. India’s trade deficit with China — the widest it has with any country — stood at $48.6 billion. India’s key imports from China include smartphones, pharmaceutical ingredients, auto components and telecom equipment.

Sinha dismissed India’s recently announced measures against China as mere rhetoric by the political leadership. He said nothing will change on the ground. “If you really want to change, then I think a number of things need to be done which can actually improve the productivity and businesses of India to make them more competitive globally,” he said. “Only then will we be able to reduce our reliance on China.”

After entering office amid great euphoria in 2014, the Modi government’s economic policies have actually done little in recent years to lift the economy, and things had begun slowing before COVID-19 struck. GDP growth rate was down to 4.2% in the last fiscal year, compared to 8.3% four years ago.

India has been looking to diversify its import basket with countries like Vietnam and Indonesia playing bigger roles, according to Pankaj Jha, a professor of strategic affairs at the O.P. Jindal Global University. “The shift from China will take some time but India is prepared for it,” he said.

This could have a particular impact on sectors such as pharmaceuticals. India’s annual import of active pharmaceutical ingredients is valued at over $3.5 billion, of which nearly 70% comes from China.” We might not have explored other options just because China was the one-point shop for us,” Jha said.

Vietnam is keen to collaborate with India, particularly in pharmaceuticals and textiles. Indonesia would like to develop a regional supply chain to India. “There might be certain cost escalation but then India is ready for it,” said Jha. “China’s loss will be somebody else’s gain.”

Nearly 70% of India’s imported active pharmaceutical ingredients come from China at present.

  © Reuters

Modi’s self-reliance drive could be a boon for industries previously shut out by cheap Chinese imports, including toys, silk and paper, but there are plenty of internal hurdles to overcome as well. “I won’t say it is not possible, it is just that India will have to make certain structural reforms on labor laws, land acquisition, facilitation of taxes, and single-window systems — which will take some time,” said Jha.

Sinha of India Ratings and Research believes that India must find the right policy mix at home if it is to effectively promote domestic industries, and should take lessons from the successes of countries like China and Japan. “You could actually go beyond aatmanirbhar, and not only will you produce for India but for the world — the way the Chinese have been doing,” he said.

It remains to be seen if India can learn from its perceived enemy how to scale up manufacturing to become a global hub while all the while maintaining a safe distance.