India is severely punishing China for its Ladakh misadventure. Over the past three months or so, a plethora of decisions have been taken and all of them invariably target the Chinese economy.
Even before the Ladakh military stand-off started on May 5, the Modi government had started taking some firm decisions against China. In April, the Modi government altered the FDI policy, and henceforth FDI from India’s neighbouring countries, including China, is allowed only through the Government route. The alteration was obviously aimed at checking predatory Chinese investments.
Days later, there were also reports about India imposing restrictions on Chinese Foreign Portfolio Investments (FPI) too.
Once the Ladakh stand-off happened and military tensions soared between the two countries, a wave of anti-China sentiment took hold of India. Confederation of All India Traders (CAIT), the apex body of trader’s union, declared plans to boycott Chinese goods worth more than 1 lakh crore rupees- 13 billion dollars approximately- by December 2021.
India is the seventh biggest importer of Chinese products, and China enjoys a trade surplus of 48.66 US billion Dollars over India. The boycott calls in India threatened to close in on the huge deficit in the Sino-India trade.
India has also been watching over China’s attempts to route its goods to India through third countries which have preferential trade agreements with India. Beijing wants to higher duties, but India has taken note of its economic misadventures.
In fact, India has also applied the ‘country of origin’ rule on e-commerce. E-commerce players have agreed to display the country of origin for products sold on their portals. This enables Indian consumers to make an informed choice about the products that they want to buy as the Modi government prepares to reduce reliance on Chinese imports.
Modi government’s blistering attack on China however came after the Galwan valley bloodshed. India decided to ban TikTok and 58 other popular Chinese apps. The decision kicked dozens of popular Chinese apps out of India’s growing internet market. TikTok alone stands to lose 6 billion US Dollars after the stringent ban imposed by India.
This wasn’t just a defence move but also a strategic manoeuvre. By identifying Chinese apps as security threats, India has unleashed a wave of international outrage against China. Earlier this month, the US Secretary of State disclosed that Washington was considering banning TikTok and other Chinese apps. South Korea too has imposed a hefty fine of 1,55,000 US Dollars on TikTok for collecting personal information of underage users.
Now, the Information and Technology Ministry has again swung into action. On Friday, it banned 47 clones (or variants) of the 59 Chinese apps that were banned earlier.
The situation in Ladakh hasn’t witnessed complete disengagement and therefore Modi government’s economic warfare against China also shows no signs of abatement.
In order to arrest Chinese investments in India, the government plans on cancelling only those bids in which China is leading. On Thursday, the Centre made it clear that companies from nations that share a land border with India will be barred from participating in the government contracts for goods and services, unless such companies register themselves with the industry department.
According to the Government of India, this decision has been taken to “strengthen the defence of India and national security”. The government order applies to both prospective tenders and those tenders which have been invited but not yet awarded. Of course, the move was seen as aimed against China in the backdrop of heightened military tensions.
Now, HT has quoted two anonymous officials as clarifying that an ongoing tender process will be stalled only if one of the technically qualified bidders is a Chinese enterprise and such a bidder is also the lowest bidder.
The officials have also said that a clarificatory order has been issued to all state governments and Public Sector Undertakings (PSUs) to scrap an ongoing tender process, and initiate a new tender process only in case of the presence of a Chinese enterprise as a qualified bidder.
According to the HT report, one of the officials said, “In other words, the tender should not be scrapped if it is unlikely to be awarded to a Chinese company.” New Delhi is thus minimising cost overruns and losses on its own side but inflicting the maximum possible damage on CCP enterprises.
Meanwhile, another 275 Chinese apps are also on the Modi government’s radar. It will be examined whether they pose a threat to national security and user privacy. According to ET, people familiar with this development say that this hints at growing concerns for security and the possibility of more Chinese apps getting banned. Big names like Tencent’s PubG and Alibaba’s AliExpress are on New Delhi’s radar.
China deliberately created war-like situations in Eastern Ladakh and therefore India is taking extreme steps for the sake of national security. In fact, at least seven Chinese companies, including telecom giant Huawei, e-commerce giant Alibaba, and Tencent, have been identified by the government over direct/ indirect links with the Chinese People’s Liberation Army (PLA).
According to a source quoted by ET what action is to be taken is yet to be examined. But India is again setting precedent for the world by identifying companies with PLA links as potential threats and an actionable ground in government policy. Some of the biggest names- many of them close to the Chinese Communist Party are being relentlessly targeted.
Modi government’s actions against China are aimed at bolstering India’s security interests. It is also signalling to China that New Delhi reserves the right to advance its own security at the cost of the Chinese economy. In the process, India is also going to escape dependence on Chinese products. Prime Minister Modi is thus making sure that Beijing loses far more in reality than what it plans to gain by turning belligerent in the higher reaches of Eastern Ladakh.