Chinese app ban could hurt India's credibility as investment destination for foreign tech firms

After banning TikTok and PUBG in the first two orders, the Ministry of Electronics and Information Technology in its third-order issued on Tuesday imposed restrictions on Jack Ma's AliExpress along with AliSuppliers Mobile App and 41 other apps. Under section 69A of the Information Technology Act, the action has been taken based on inputs regarding these apps being engaged in activities which are prejudicial to sovereignty and integrity of India, defence and security of the state and public order.

"The ban on Chinese apps has made people aware of the hidden threats that come along when data is being shared and uploaded by a foreign host as indigenous applications guarantee information security and ensure client's protection better than these Chinese applications. For several years, the Indian market was dominated by Chinese apps. These companies with deep pockets spent extravagantly on marketing activities which Indian tech startups could not cope with," says Kapil Jain, Founder and MD of Graphitto Labs.

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The ban of Chinese apps over the last few months has witnessed a sudden surge in the home-grown apps. The government of India's decision to ban some popular apps is considered as a strategic move to boost Indian app ecosystem. The bans have opened up tremendous opportunities for the Indian apps and gaming ecosystem to align their businesses with the government's Atmanirbhar Bharat strategy. "Such steps will take India one step ahead to be an Atmanirbhar economy and end up being helpful for Indian tech business people. Banning Jack Ma's AliExpress is a major dent on Chinese aspiration to exploit Indian e-commerce market and simultaneously offer Indian e-commerce companies to offer better application and competitive offerings," adds Jain.

Echoing the sentiment, Pavel Naiya, Senior Analyst, Counterpoint Research explains, "With this ban, Indian e-commerce platforms will get some benefits along with other local suppliers in the short run. However, replacing the manufacturing and supply chain of China with local vendors is an uphill task. We will likely see other international reseller platforms emerge to fill this market gap in the long run."

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While the Indian users are welcoming these Chinese apps ban, Akash Karmakar, a partner at the Law Offices of Panag & Babu, highlights how the move can backfire. "MEITY has invoked its powers to block these apps on the same grounds as stated earlier, (sovereignty and integrity of India, defence of India, security of state and public order) these terms are capable of a wide interpretation. The lack of well-defined parameters as opposed to an elastic definition could cause hurt India's credibility as an investment destination for foreign technology companies, in a manner akin to how the vague definition of 'public policy' was earlier used to resist enforcement of foreign arbitral awards. The MHA defining its expectations and the MEITY conducting the ongoing proceedings against banned apps in a transparent and time-bound manner could help prevent such an adverse perception about the ease of doing business in India."

As the border row intensified between India and China in May this year, the government soon moved to ban select Chinese apps citing such as sovereignty and integrity of India. The decision to ban popular Chinese apps retreats the government stand that aggression on the border will not be tolerated.

"Legislating a robust Data Protection Law and an updated National Cyber Security Strategy is crucial to tackle the neo-challenges presented by a technologically advanced neighbour. It is equally important to follow the due process while regulating Apps which impact user privacy and national security", says Kazim Rizvi, Founding Director, The Dialogue.