Indian Prime Minister Narendra Modi (L) talks to Chinese President Xi Jingping during the BRICS meeting in Goa, India, on October 16, 2016.
Prakash Singh | AFP | Getty Images
India’s crackdown on Chinese apps could help the country’s homegrown technology firms grow, analysts told CNBC.
This also presents an opportunity for U.S. giants which have long seen the world’s fifth-largest economy as critical to their future growth prospects, they said.
India’s Ministry of Electronics and Information Technology claimed the apps were “engaged in activities which is prejudicial to sovereignty and integrity” of the country. The government also alleged these services sent citizens’ data to servers located outside of India.
Earlier in June, India banned 59 Chinese apps. Tensions between the two nations have been on the rise since June, when a border clash left 20 Indian soldiers dead in the disputed Himalayan mountain border in the region of Ladakh.
And those tensions have been flaring up again.
“Chinese firms are learning a painful lesson. And, that is, the foreign policy of China has hijacked their business. China’s geopolitics with India has led to a nationwide fallout for Chinese firms,” Abishur Prakash, a geopolitical specialist at the Center for Innovating the Future (CIF), a Toronto, Canada-based consulting firm, told CNBC by email.
The Indian government has specifically targeted apps. But Bloomberg reported last month that Chinese telecoms equipment makers Huawei and ZTE are also set to be shut out of India’s 5G trials. If it happens, India would be following others — including Australia and the U.K. — in excluding Huawei from its next-generation mobile networks.
The crackdown on Chinese technology presents opportunities for both Indian and U.S. tech firms.
“Certainly, we have seen the Indians taking even a more aggressive stance on banning Chinese apps, Chinese technology, than the United States has proffered in its battle with the Chinese,” Rodger Baker, senior vice president of strategic analysis at Stratfor, told CNBC’s “Squawk Box Asia” on Thursday.
“Part of that is the Indians trying to stir their own domestic technology, really incentivize the development of their technology sector and try to position themselves also as a place for other countries to be able to invest in technology development.”
‘Win-win’ for India and the U.S.
India has proved attractive to China’s technology firms as they have looked to expand outside their domestic market.
Chinese investors and companies have been investing in local companies, putting in an estimated $4 billion into Indian start-ups, according to think tank Gateway House. And 18 of India’s 30 so-called unicorns — or start-ups valued at over $1 billion — are now Chinese-funded.
Chinese apps like short video-sharing platform TikTok, meanwhile, have managed to challenge big U.S. giants…