The TLDR: The government banned a new list of 118 Chinese apps—including the greatly beloved PubG, which escaped the axe the first time around. The latest ‘digital strike’—as BJP leaders like to describe it—comes once again in the midst of increasing border tensions with China. When TikTok was banned in June, there was a sense that Sino-Indian relations may have hit a temporary icy patch. But the government’s increasingly aggressive rhetoric may point to something more serious. A new cold war perhaps? If so, there’s a lot more at stake than just a fun app. 

Tell me about the ban

The ban: According to a statement put out by the Information & Technology Ministry, the “malicious apps” have been banned because they “collect and share data in surreptitious manner and compromise personal data and information of users that can have a severe threat to security of the State”—and are therefore “prejudicial to sovereignty and integrity of India, defence of India, security of state and public order.”  (See the full list here). 

Point to note: Much like TikTok, this is likely an interim order under section 69A of Information Technology Act—which allows the government to issue a temporary ban by citing national security.  But in order to challenge the ban, the companies bear the burden of proving they have not committed any of the alleged crimes. And that’s why a number of internet freedom activists are unhappy:

“There is little in terms of evidence on how these apps are threatening the sovereignty, integrity, and defence of India… Arbitrary government power has been exercised here. Remember if today Chinese apps can be banned, tomorrow nothing stops them from banning Indian apps in a similar non-transparent manner.”

Goodbye PubG: Of the many apps, the loss of PubG is likely to be mourned the most. India is PubG’s biggest market with 175 million downloads—which is 24% of the app’s global total. China and the US are way behind at 17% and 6% respectively. Hence, the immediate wave of mourning memes like the one below (h/t Mithil Oswal):

And this is about Ladakh?

Yes. TikTok was banned after a violent clash in Galwan valley (explained here). But that was followed by a lot of sweet talk about “disengagement” on both sides. And there was a sense that things would soon go back to normal. But over the weekend, things got ugly and fast.

Lake Pangong: The government alleged that Chinese troops made a new push—this time in Lake Pangong (more in our explainer here).This is a high-altitude lake in disputed territory—surrounded by ‘fingers’ (or hilly ridges) that are numerically marked. Since May, there has been a massive buildup of troops (far greater than Galwan). See this satellite image below:

China has moved in to claim 8 km in this region since May—which is now the current “status quo.”

Latest offensive: Over the weekend, New Delhi alleged that Chinese troops attempted to push forward and claim new territory—but were rebuffed by Indian troops. And the army has become more “proactive” in their measures:

“Our soldiers have now dug into positions on the heights, which are within our perception of the Line of Actual Control, with all requisite weapons like anti-tank guided missiles and equipment to defend the area.”

While New Delhi insists these measures are being taken to force “disengagement,” Beijing claims the opposite: “the Indian troops illegally crossed the line in provocation and unilaterally changed the status quo and broke the two sides’ agreement and consensus.”

A new narrative: For months after the Galwan clash, New Delhi insisted that the talks were going well, and a resolution was imminent. However, newspapers are now filled with unattributed (leaked) reports of bad faith: 

“[T]he Indian side noticed towards the second half of July that diplomatic and military-level communication had gone cold. Phone calls were not returned immediately, meetings were not scheduled within a reasonable time frame, and the turnaround time for responses to India’s note verbale to Chinese counterparts was slower. This raised alarm bells in South Block—something was amiss in Beijing’s behaviour.”

More notably, PM Modi or President Xi—once super-duper besties—have not intervened to dial down the heat.  Former foreign secretary Nirupama Menon Rao tweeted: 

“The absence of top leadership-level contact—viz. between @PMOIndia/@narendramodi and (President) Xi Jinping—as tensions mount in the continuing India-China standoff is inexplicable. Surely, the two informal summits and many bilateral meetings between them should have helped.”

So now what?

A ‘hot war’: is unlikely. That’s just not China’s style. Beijing’s strategy has been described more often as salami slicing—i.e. peeling off strips of territory via border incursions to establish strategic advantage. And India—reeling from an economic meltdown, raging pandemic and a serious military disadvantage—is hardly keen to add an all-out war to its list of woes. 

That said, two hostile armies—armed to the teeth and facing each other across a lake—is a recipe for trouble. 

Economic retaliation: is the most likely outcome if things don’t cool down soon. The app bans are just one part of New Delhi’s attempt to inflict damage. All new Chinese investments have been put on hold, and ongoing investments are in serious jeopardy. Chinese imports have slowed to a trickle. 

But as we’ve explained before, a trade war with China isn’t exactly good news for India. It is our second-largest trading partner, and our economy is heavily dependent on ‘Made in China’ goods—be it for heavy equipment or key pharmaceutical ingredients. And then there’s the matter of Chinese investments, i.e. the Tencent problem.

The Tencent problem: The Chinese corporate giant’s portfolio includes not just PubG Mobile but also a whole array of banned apps: WeChat, iPick, VooV Meeting, and WeChat Work. 

But more importantly, it is the 800-pound gorilla in India’s startup system:

“Tencent incidentally is one of the biggest investors in Indian consumer Internet ecosystem, having major investments in as many as 15 startups such as Doubtnut, PolicyBazar, Khatabook, Swiggy, Flipkart, Hike, Practo, and Dream11, which is the title sponsor for the 2020 edition of the Indian Premier League. In April 2017, Tencent had invested $700 million in Flipkart while it has invested close to $1100 million along with Softbank in homegrown ride hailing service Ola Cabs.”

A Gateway House report pegs the total amount of Chinese investment at $4 billion—which includes Big Basket ($250 million), Paytm  ($400 million), Paytm Mall ($150 million), Zomato ($200 million) and Snapdeal ($700 million).

The bottomline: Many Indians will mourn the loss of TikTok or PubG—a loss made greater in the midst of such stressful times. Great many others—business owners and employees—will worry about their financial future. Not losing sleep: Mukesh Ambani, of course. He’s already sitting pretty with shuddh ‘Not Made in China’ investments worth $20 billion in his bank. Also: JioSaavn just inked a deal with TikTok rival Triller.

Moral of this story: Everyone else’s lemon is Mukesh-bhai’s lemonade.

Reading list

Indian Express has the best overview of the latest ban. We did two in-depth explainers—which include reading lists—on the border wars and Chinese investments. Also read: Our explainer on whether the Quad—an alliance between India, US, Australia and Japan—can help us outmatch China. Worth a closer look: Gateway House’s report on Chinese investments in India. And if you need it: Indian Express also explains why PubG is Chinese.

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