Chinese companies dominate the smartphone market in India, occupying the top five slots by market share besides No. 2 Samsung, which is Korean-owned.

India’s growing discord with China could be a gift for U.S. companies looking to deepen their access to the country’s massive market for technology hardware and services.

India is accelerating a plan to attract more foreign investors to manufacture electronics like smartphones domestically, rather than relying so heavily on its massive neighbor and top trading partner in China, Ashok Malik, policy advisor for India’s Ministry of External Affairs, told World Affairs Council of Atlanta President Charles Shapiro from New Delhi Monday. 

Mr. Malik said India has long harbored plans to reduce its dependence on China — indeed Samsung and Apple contract manufacturer Foxconn have built factories there already — but its determination to move up even further up the value chain has taken on new urgency in the aftermath of a deadly skirmish in the Himalayan borderlands last month. 

Ashok Malik

Public opinion toward China has “hardened” following the fight, during which 20 Indian soldiers and an undisclosed number of Chinese troops died, said Mr. Malik, who described the roots of the territorial dispute at length. 

India’s ambassador to the United States intimated during a call June 18 with the Atlanta Council on International Relations that the government believes Chinese forces premeditated the attack.

This comes on top of growing global skepticism of Chinese technology fomented by the Trump administration, which has intensified as U.S.-China relations have soured amid the pandemic. 

For his part, Mr. Malik envisions the post-COVID world as one where global trade continues on a more cautious, reciprocal basis, citing recent discussions on deepening health care links with the United States.

“You will start looking for specific suppliers who are also dependent on supplies from you,” he said. “Countries you trust, democratic systems that trust each other, can form very fruitful partnerships.”

India is putting in place tax and investment incentives — including some designed in consultation with global smartphone makers — to welcome more U.S. companies, who have at times complained about red tape and ownership restrictions that have persisted despite a concerted “Make in India” campaign launched by Prime Minister Narendra Modi more than five years ago during his first term.

“Let’s face it — there is never going to be another China,” Mr. Malik said, pointing to India’s gradual progress on the manufacturing front. “It’s not like you can start making everything from day one. You start making some parts of the phone, and you go deeper into the value chain as you go along. We are hoping India will now be part of the story.”

The Himalayan clash has led to a social-media backlash calling for a boycott of products made in China, whose smartphone brands like Huawei, Xiaomi, Oppo and Vivo dominate the Indian market, many of them boasting assembly operations within India. 

Chinese tech giants have also poured more than $4 billion into Indian startups. Alibaba’s Ant Financial has a stake in One 97 Communications, which owns mobile fintech giant PayTM. Tencent, which runs Chinese mega-app WeChat, has stakes in ride-hailing Ola and Walmart-owned ecommerce giant Flipkart. 

Even as it engaged in talks to cool tensions with China, India announced that it would block 59 Chinese apps including the social video sensation TikTok, which is owned by China’s ByteDance Inc. and has more than 800 million global users. In the U.S., the app has become a flashpoint for U.S. legislators concerned about data security within Chinese-owned platforms. 

Meanwhile, India’s Reliance Jio, which counts about 400 million mobile subscribers just two years after its birth, has raised more than $15 billion for its Platforms business since April from major investment firms, sovereign wealth funds and tech titans like Facebook ($5.7 billion for nearly 10 percent stake) and Intel, who are all betting on the company’s ability to bring even more of India’s massive population into the formal, digital economy. 

Mr. Malik pointed out that the Indian government has moved steadily toward this goal, including through the Jan Dhan Yojana program that has led to the creation of nearly 400 million bank accounts including for many citizens “at the bottom of the pyramid.”

Though many questioned the wisdom of the Modi administration’s rash “demonetization” move that took vast amounts of cash out of circulation in 2016, it did accelerate the digitization of the economy, which Mr. Malik said helped with disbursing stimulus funds directly to the vulnerable during the COVID-19 outbreak. Further stimulus is now being aimed at aiding threatened small businesses, from roadside eateries to cobbler shops. 

“These are businesses that could just die without 10 days of work,” he said. 

India has seen its case numbers surge in recent weeks as reopening continues after nationwide lockdowns spanning April and May. The country now faces a prospect that has seemed unthinkable in recent decades: a decline in GDP. 

“The fact that we are discussing a contraction is in itself so new because we haven’t had a contraction in 40 years,” Mr. Malik said. “It’s been a shock, especially for a generation that has not known much but visibly good growth.” 

With 24,000 new COVID-19 cases identified Monday, India now third in the world after the U.S. and Brazil by total cases, surpassing Russia Tuesday as the numbers neared 700,000. Mr. Malik pointed out that the case number is not all that surprising in a country of 1.3 billion people; what has been heartening has been the relatively low fatality rate, he said. The government does not plan to reinstall national lockdowns, though some local governments are moving ahead with localized restrictions. 

Watch the full talk by becoming a member of the World Affairs Council of Atlanta. 

Follow Mr. Malik on Twitter at @malikashok.

As managing editor of Global Atlanta, Trevor has spent 15+ years reporting on Atlanta’s ties with the world. An avid traveler, he has undertaken trips to 30+ countries to uncover stories on the perils...