Popular game PlayerUnknown's Battleground has drawn millions of Chinese players to the international playground on Steam. Photo: IC

Chinese investors' confidence in India will be battered and hopes of an improvement in bilateral economic relations will dim if India moves to ban 275 Chinese apps following its previous block, analysts said Monday.

The comment came after India's Economic Times newspaper reported Monday that India has drawn up a list of 275 Chinese apps that it will examine for any violation of national security and user privacy, citing people familiar with the matter.

The list includes gaming app PubG backed by China's internet giant Tencent, Zili by Chinese smartphone vendor Xiaomi, AliExpress by e-commerce giant Alibaba as well as apps like Resso and ULike from TikTok-owner ByteDance. Among the Chinese apps being scrutinized now are 14 MI apps by Xiaomi as well as lesser-known ones such Capcut and FaceU, according to the report.

The heightened scrutiny follows a ban on 59 Chinese apps announced by New Delhi on June 29 which included some of the biggest tech behemoths such as WeChat and TikTok, which were wildly popular in the Indian market.

A spokesperson for Xiaomi told the Global Times Monday that there is nothing to comment on at present. "It's not an official policy issued by the (Indian) government, just speculations and 'inside news.'"

An Indian PubG fan named Akash told the Global Times Monday that "I haven't heard about the reported ban, but if it's true, I will be very sorry for all the Indian users including myself."

"The game is very creative with lots of cool features and I can also make friends from it, and I hope our government will not take the move," Akash said.

The souring economic ties between China and India following the border clash in the Himalayas have aroused concerns among Chinese investors in the South Asian country, where anti-China sentiment has been fanned since then.

Sha Jun, executive partner in the India Investment Services Center of Yingke Law Firm, told the Global Times on Monday that if the current tightened scrutiny leads to a ban on the 275 apps, it will deal a huge blow to foreign direct investment (FDI) in India from China.

"It means nearly all capital from China will plummet to virtually zero," said Sha.

India's amended FDI policy, which is primarily aimed at China, has cooled investment from China in the first half of the year. "There was almost zero Chinese investment in India's manufacturing sector in the first half. If the fresh move against Chinese apps comes to pass, all Chinese firms will certainly prepare to retreat from the country," he noted.

In April, India put a blanket ban on investment via the automatic route by entities from countries that share a border with India. The move of amending its FDI rules was widely seen as targeting China. Under the new rule, investments require government approval instead of the previous automatic route. 

As of December 2019, China's cumulative investment in India exceeded $8 billion.

Chinese capital has played a vital role in Indian market in such sectors as automobiles and digital technology. By the end of 2019, more than half of India's 31 unicorn companies had been invested by Chinese tech giants Alibaba and Tencent, according to the Iron Pillar Fund, a fund management company in India.