Wider India app ban means darker days for investors

Source: Global Times Published: 2020/11/25 20:48:40

Illustration: Tang Tengfei/GT

The Indian government has announced on Tuesday its intention to block more Chinese apps, including AliExpress, in a list of 43 on "spurious national security grounds." 

According to Indian media outlet reports, some Indian internet giants have expressed their support for the decision made by New Delhi, which is understandable because through this action the government has actually helped to drive their Chinese competitors out of their country. 

The move also marks the latest in a series of protectionist measures taken by Indian authorities to boycott products and services linked to China. 

Against the background of the lingering China-India border deadlock, India's stoking of a growing nationalist sentiment as a means of promoting economic protectionist policies has not only severely damaged the legitimate rights and interests of Chinese companies, but also delivered a heavy blow to the confidence of investors from other countries.

From banning Chinese mobile apps to various forms of restrictions on Chinese investment, the Indian government may genuinely believe that they are battling to protect the interests of domestic industries from competitive Chinese rivals, but such an approach is actually weakening the global competitiveness of Indian companies in the long run.

India has long been seen as one of the world's most protectionist economies, and the xenophobia exhibited by its leaders is not just directed at Chinese companies. 

For a long time, high tariffs and taxations have been a major headache for many multinational manufacturers in India. 

In September, US motorcycle manufacturer Harley-Davidson announced plans to exit the Indian market, which many believed could be mainly attributed to high tariffs and costs in the local market.

Despite the vision that India could one day become the world's next global manufacturing powerhouse, protectionism has actually deprived India of the opportunity to improve its competitiveness by participating in regional and even global competition. 

While protectionist measures may help avoid external shocks to domestic industries in the short term, in the long run, they will reduce the incentive for domestic industry players to push forward with necessary reforms to promote efficiency.

What's worse, India's crackdown on Chinese mobile apps appears to be signaling that the country's indulgence of protectionist mentality is spreading from low-end manufacturing to the technology sector. 

The collateral effect of India's political clampdown on Chinese businesses, products and services are likely to discourage more potential international investors.

Given India's severe coronavirus epidemic situation and its battered economy, blatant market intervention detracts from the Modi government's efforts to attract the much-needed foreign investment. 

With the unilateral restrictions India has imposed on Chinese companies and investments under the guise of "national security," it is not hard to conclude that it may arbitrarily use the same rationale to discriminate against businesses from other countries in the future.

India's refusal to join the Regional Comprehensive Economic Partnership has already been interpreted by the international community as stubbornness and a way of overprotecting its conservative economy. If India's image cannot escape the stain of protectionism, then foreign investment is bound to collapse.

Posted in: GT VOICE

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