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The Indian government’s recent ban on 59 Chinese apps and the subsequent 77-questions security assessment seeking details around beneficial ownership, financial structure and location of data centres among others, has created a stir on the global front – with countries such as US, EU and Australia now contemplating a similar move. India’s move seen more as a non-military retaliation to the border standoff appears symbolic than a strategic policy response, and therefore intended results may be short-lived. I say this for two reasons.
One, China’s rising digital dominance in global economy and particularly in India, hasn’t happened overnight. Chinese smartphone makers, wearable devices and hardware/network equipment manufacturers have seen phenomenal growth over the last 5-7 years. Smartphone brands such as Xiaomi, Oppo, Vivo, RealMe and OnePlus have taken on Indian counterparts such as Micromax, Karbonn, Intex and Lava and now control over 80% market share. With most of the Chinese smartphones having apps pre-installed on them, data security issues have existed, but they simply got sidelined or ignored amidst the euphoria and obsession surrounding the mobile internet economy. Two, banning apps developed by foreign companies with strong state control (like the CPC) is a growing global trend – much a fallout of geopolitical tensions. India’s ban does throw a setback to China’s ‘Digital Silk Road’ program and might knock off a few billion dollars off the wacky valuation of Chinese tech startups, but does that help spur India’s digital economy? Or does India have the arsenal to replace the Chinese apps to really get the ‘Atmanirbhar’ tag? The answer may be no, at least for now with my arguments as under:
One, the popularity of most Chinese apps such as TikTok, Weibo, Helo, ShareIT and WeChat stems from their ability to create user-generated content (UGC) – for even the most non-tech savvy users. Importantly, this makes it a lucrative ad targeting channel for big brands riding on a vast user base. On the contrary, most Indian apps pale in comparison and don’t really seem to offer a superior UX to drive engagement.
Two, India needs to create a robust ecosystem for digital platforms, beyond looking at app-based businesses to truly unlock the potential of digital economy. This would primarily mean greater focus on hardware set-up to rival the ‘app-phone bundling’ strategy, creating supply chain hubs and offering incentives and funding support for startups beyond what is envisioned in the Startup India program. This also means, cutting down on Chinese funding. Currently, the Chinese trinity of BAT (Baidu, Alibaba and Tencent) have significant investments in several Indian startups such as Paytm, BigBasket, Ola, Byjus and Zomato to name a few and China’s total investments have risen 12X in 2019 alone.
Three, India has to up the ante on digital skilling especially around AI/ML and data analytics. The lack of skills is what may explain the evident gap between India’s app downloads vs app creation. reflected in the average number of downloads per app: for Indian apps it is 171,000 compared to 1.74 million for Chinese apps. China’s advanced ML engines along with their engineering prowess to create error-free codes, has been a critical factor fuelling the success of its app factory. The adoption of the Schenzen manufacturing model’s principles of ‘fast-to-market’ and ‘quick-to-fix’ being the other. India needs to invest in AI skill-building and create an open developer ecosystem to match Chinese tech startups’ quality and competitiveness.
While ‘Atmanirbhar Bharat’ is strong in intent and offers a blueprint to guide India’s self-sustained economic growth, a lot of effort is required to tame the Elephant to take on the Dragon!