India’s crackdown on ByteDance sends a chill among foreign firms
Published: Apr 07, 2021 08:13 PM
India  Illustration: Tang Tengfei/GT

India Illustration: Tang Tengfei/GT

After illegally freezing the bank accounts of Chinese tech giant ByteDance, an Indian court on Tuesday reportedly asked the company to deposit $11 million for alleged tax evasion. ByteDance denied the allegation in court, saying the freeze amounted to harassment and it does not owe any tax.

Given no more details have been disclosed in the case thus far, it may be too early to jump to any conclusion. After all, for emerging sectors like internet industry, there remain plenty of controversial areas in regulation that require discussion and resolution. The recent link tax spat between the Australian government and US social network giant Facebook is a perfect illustration.

However, essentially different from the Australia-Facebook feud, what the Indian government and court have done to ByteDance appears nothing short of a brutal crackdown. 

Among dozens of others Chinese apps, ByteDance's TikTok was permanently banned by New Delhi in January with a catch-all guise of "national security" concerns. The arbitrary move has sabotaged economic and people-to-people exchanges between the two Asian neighbors.

By freezing ByteDance's bank account and requiring the company to deposit more money over an unproved allegation, Indian tax authorities and court seem to have escalated the arbitrary crackdown. If this developing case is in turn proved to be another baseless frame on the Chinese company, India's judicial credibility will undoubtedly face serious questioning.

From app ban to investment restrictions, a series of instances clearly showed that the Indian government's discriminatory moves against Chinese companies are driven by economic nationalism and geopolitical consideration of leaning toward the US' political maneuver to contain China. In addition, New Delhi's irrational decisions are closely linked to the influence of vested interest groups in the South Asian country.

The Indian government should realize that if its economic policy decisions constantly pander to domestic vested interests groups' influence or other countries' strategic calculation, what at expense may be India's national interests and economic development opportunity.

Although India's judicial system has appeared to remain independent, there are obvious indications that the local court's gross move of freezing ByteDance's account is under political pressure. Is India really prepared to undermine its judicial credibility to crack down on one Chinese company?

If the Indian government once again chooses to make another concession to vested interest groups and geopolitical consideration and Indian judicial system chooses to bow to the political pressure, ByteDance may become a landmark case on which India totally loses its credibility in building and maintaining a fair business environment. 

After the rampant anti-China sentiment in India and discriminatory policies against Chinese businesses pushed China-India economic exchange to the rock bottom, bilateral economic and trade relations have finally shown some stabilizing signs recently. If New Delhi continues to indulge economic nationalism to go out of control, the hope for both sides to improve economic ties will be extinguished.

If ByteDance in turn becomes an indicator of India's deteriorating business environment, Chinese companies will choose to avoid the Indian market in the future. For companies from other countries, their confidence in India market will also be largely damaged.

As the Indian economy is still struggling under the impact of the COVID-19 pandemic, the continued decline in external investment, especially in the high-tech sector, will undoubtedly make the recovery of the Indian economy even more difficult.

The author is director of the research department of the National Strategy Institute at Tsinghua University.

blog comments powered by Disqus