India banned over a hundred Chinese apps, including versions of Tencent Holdings Ltd’s popular game PUBG Mobile and online payments giant Ant Group Co’s Alipay, as tensions escalated on the nations’ disputed border.

The government has received complaints about the apps stealing user data and surreptitiously transmitting it to servers abroad, the country’s Ministry of Electronics and Information Technology said in a statement on Sept 2. It said the apps are "prejudicial to sovereignty and integrity of India” as well as “security and public order”.

The late evening ban came as India upped the ante in its feud with China after multiple rounds of high-level military talks failed to end the months-long standoff. Indian soldiers claimed strategic outposts, according to officials with knowledge of the matter, while the defense ministry in New Delhi said its military was able to stop a push by Chinese troops to violate existing agreements and claim more ground late on Aug 29.

"India is taking a more aggressive stance towards China, both to reduce its economic reliance on China while also trying to show that India won’t be caught off guard again and will push back against perceived Chinese attempts to change the status quo,” said Akhil Bery, Washington-based analyst at Eurasia Group. "India recognises that access to its market is its advantage right now; by cutting off China’s access to it, China is losing access to one of the world’s largest markets which has a significant amount of potential.”

Over June and July, India had banned more than 100 Chinese apps including TikTok, the much-downloaded short video app from ByteDance Ltd, and Alibaba Group Holding’s mobile browser, UC Browser. The move followed mid-June border skirmishes, which killed 20 Indian soldiers and an undisclosed number of Chinese troops.

Since then, India has also changed rules to limit Chinese investments in Indian companies and tightened scrutiny for visas for Chinese businessmen, academics, industry experts, and advocacy groups. China’s Huawei Technologies Co and ZTE Corp are set to be kept out of India’s plans to roll out its 5G networks, people familiar with the matter said last month.

The latest ban’s biggest impact will be felt on the tens of millions of fans of the mobile version of PlayerUnknown’s BattleGrounds, popularly known as PUBG, which had seen its user numbers rocket in India as the coronavirus-related lockdowns boosted gaming. In the Hunger Games-style competition, 100 players face off with automatic weapons until there is only one left standing. Tencent introduced a stripped down mobile version of the battle royale title, making it among the most popular smartphone games in the world, amassing fans in countries that include the United States and Russia.

Tencent’s shares dipped as much as 1% but were largely unchanged by late morning trading in Hong Kong. A Tencent representative didn’t have immediate comment when contacted by Bloomberg.

The latest ban encompassed a version of Baidu Inc’s core search service and Ant Group’s Alipay, the mobile wallet provided by a Chinese fintech giant that’s preparing for a potentially record-breaking IPO. Also included were Alibaba’s Taobao marketplace as well as Tencent’s reading app and popular smartphone game Arena Of Valor.

Although India is still a small market for these apps by revenues, it offered a large future opportunity, said Anil Kumar, chief executive officer of Bangalore-headquartered RedSeer Management Consulting Pvt.

"With increasing border tensions, the repeated bans show that India fears data breaches and a real security threat from these apps,” Kumar said. "The government wants to punish China by pushing back its technology giants.”

 - Bloomberg