Chinese Tech face new challenges in India

As tensions between China and India escalate, India has banned 59 Chinese mobile apps including TikTok and WeChat. This is a significant set-back for Chinese tech in what is a competitive and lucrative market. 

India is a key target market for Chinese and US tech companies. With a population of 1.3bn, India has one of the world’s largest and youngest populations, a growing middle-class and more than twice as many mobile internet users than in the US. According to PwC, India is expected to have 850m internet users in 2022 and the e-commerce sector is expected to grow to $100bn by 2022. 

Tech companies see enormous potential for growth. For Chinese investors, India offers an opportunity to replicate their business model proven in China. US companies also recognise the potential, Facebook’s recent $5.7 billion investment in telecom operator Reliance Jio, being a high profile example. Reliance Jio attracted nine further investments by global investors in a two month period.

The ban of these Chinese apps is one of a number of measures likely to impact tech investment in India. India recently introduced more stringent foreign investment controls. It remains to be seen how these protectionist policies will impact the flow of investment in India at a time when the world is grappling with the covid-19 pandemic and economic recovery is uneven and unpredictable. Despite the barriers, investor interest in India remains strong particularly in relation to digital infrastructure.