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The Indian government has gradually taken various steps to curb and restrict business transactions with entities based out of China. In addition to banning close to 180 apps, India has also restricted Chinese involvement in public procurement and foreign investments. But questions have now been raised, both on the efficacy of such moves, as well as their legality.

The impact of such moves has been felt across industries, particularly considering the substantial investments already made by Chinese firms in India, and the reliance of various Indian companies (prominently start-ups) on Chinese funding. Accordingly, a legal challenge to such curbs introduced by the government cannot potentially be ruled out, particularly given that the proportionality test may not be met i.e. the real impact of such steps taken by the Indian government is grossly disproportionate to the stated intent of the government behind introduction of these steps.

Background to the banning of apps and their impact

In July, the Indian Ministry of Electronics and Information Technology (‘MEITY’) had taken the unprecedented action of banning 59 apps by invoking Section 69A of the Information Technology Act, 2000 (‘IT Act’) read with the relevant provisions of Information Technology (Procedure and Safeguards for Blocking of Access of Information by Public) Rules 2009 (‘IT Rules’). According to a statement, MEITY justified the ban citing that the apps in question were engaging in activities “prejudicial to sovereignty and integrity of India, defence of India, security of state and public order,” and they were “stealing and surreptitiously transmitting users’ data in an unauthorized manner to servers which have locations outside India.

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