In the Delhi riots early this year, the government used data gathered from the national database to track and arrest protesters. Imagine what they could do if they could track your phones. At least Google is only selling me real estate ads (woefully inaccurate ones too) and not actively trying to imprison me or my family (bonus points if you're a minority).
The tech industry thrived precisely because there is little regulation.
If your apps have to go through the Indian government to be published, be prepared to pay bribes to pass through the regulatory hurdles and needless paperwork.
No Indian government in my living memory has worked to reduce regulations and compliance, including the current one.
This Indian government has certainly reduced regulations and compliance - if you're in the B club. I have a distant grand uncle and an uncle both in the B club. They were essentially waved through to set up shop in UP - even though they're Muslim, openly religious and practicing, and have literally been photographed very often inviting Rahul Gandhi and other Congress leaders to their homes right before elections.
Money talks. I mentioned in another comment on HN, that if you are in the B club, you're likely the one ordering the gangsters in the government.
People can be justifiably afraid of the government without doing anything wrong, especially if the government has a track record of abusing tools at its disposal, enforcing unjust laws, or failing to maintain a good balance of civil rights (such as to peaceful protest - not the same as rioting) needed in a healthy democracy.
Indian Government being arbiter of the app ecosystem on a phone and pre installing apps? Ominous vibes. Good luck with your desire for competition and innovation.
[1] - https://www.timesnownews.com/business-economy/industry/artic...