The improperly aggressive stance and encroachment of Chinese troops across the LAC in Ladakh has triggered a sentiment across the country to boycott Chinese products. China emerged as a manufacturing hub of the world in the 1990s that time the country was under grave poverty and unemployment but china soon started to develop and was able to pull out the bulk of its population above subsistence and poverty levels. In 1981, 88% of the Chinese population earned $1.99 a day and now less than 1% of the population is below that level. China is a communist country, where people’s rights are incredibly suppressed and human resources are over-exploited in the name of providing service to the state.
Chinese companies receive huge aid from the state to raise capital, the land is made available at negligible cost, availability of cheap electricity, water, and labor, makes it possible to produce products at unimaginably low costs. Moreover, environmental norms for establishing industry have been further relaxed since 2015. As a result, large-scale manufacturing units have mushroomed in designated areas. In fact, Hubei has been declared the world’s most polluted province by the WHO. In addition, China spends 200 billion dollars on research and development (R&D) every year. China is known for violating patent laws with impunity and is aggressively competitive in trade deals. Therefore, China has become a global factory that produces a huge variety of fairly high-quality, cost-effective products and has almost gained a monopoly in the following: 80-90% of the primary chemicals used to make medicines worldwide. 70-85% of global solar panels. 75-90% high-speed rail system. · agricultural machinery etc.
India’s dependence on China
China is one of India’s largest trading partners. The total bilateral trade between India and China during the last year was 93 billion dollars. India has $75 billion (14-16% of total imports) from China Valued goods imported and exported just $18 billion (5% of total exports) And therefore, the trade deficit with China during the year 2018-19 was up to $56.8 billion. India mostly exports products that require low efficient trade infrastructures, such as rice, cotton, diamonds, jewelry, yarn, textiles, low-end engineering products, generic medicines, and petrochemicals. Chinese exports to India strongly rely on manufactured goods to meet the demand of rapidly expanding sectors such as telecommunications and electricity, while India’s exports to China are characterized by the supply of “primary” or intermediate producing raw materials.
India’s dependence on China for trade and commerce of the mentioned products makes it extremely difficult for India to impulsively cut the trade canal with China: India has the third-largest pharmaceutical industry in the world. However, 90% of life-saving drugs and 75% of the ingredients to produce bulk drugs come from China. The same heat was felt by drug makers during the COVID-19 lockdown in India. In addition, 80% of the medical devices being used in hospitals are manufactured in China. About 30% of automobile components are made in China and any break in supply can seriously affect automobile manufacturing in India.
India’s middle-income group relies heavily on cheap consumer durables from China, 60% of electronic devices and 66% of the smartphone market has been captured by China. Xiaomi, Vivo, Oppo are household names. Almost the entire toy market has been occupied by Chinese products in India. Even small items like bicycles manufactured in India are approaching about 50% of the components from China. China has a 30% stake in the diamond industry in India. China is funding the most important startups in India, such as Flipkart, Ola, Paytm, Bias, Jomato, Big Basket, Dream11, etc. China has invested $4 billion in these startups.
Given India’s heavy dependence on China for essential commodities, exploring the possibilities of reducing dependence on Chinese products makes it clear that we cannot afford to impose a complete ban on Chinese products only. However, the prevailing scenario should be taken as an opportunity to start our journey towards self-sufficiency. COVID-19 should serve as a wakeup call for the chemical industry and the national sentiments roused as a result of the border stand-off can be suitably used to help India gradually release from the trap set by the dragon. Here are some of the steps that can be used to reduce dependence on Chinese products— identify items that we can do without, for example, India imports firecrackers worth Rs. 1,500 crores ( most of it uses false declarations in import documents), and other Chinese manufactured goods which are non-essential and we Indians take a conscious decision not to use them.
It is never good to put all the eggs in one basket. Wholesale drug makers should start exploring others’ ways to import materials, such as Taiwan, South Korea, and the West. Similarly, the government should show its direct indulgence to help shift different sectors to other options. The Government should take credible steps to woo foreign and domestic investors to set up manufacturing in India. Unfortunately, more of the same lip service is being given. Last year, 56 companies from China got a place, 26 moved to Vietnam, 11 went to Taiwan, 08 to Thailand, 02 to Indonesia, and only 03 were relocated to India. Opportunistic acquisitions of Indian companies by China/China Curbing takeovers, particularly at this time when COVID-19 has led to a financial crisis. However, the government has recently revised the FDI policy, with a lot of investments “hidden” by China, as it comes through Hong Kong, Singapore, and Mauritius.
The findings are easier to ban Chinese products said than done. If India does not import from China, we will be left with either expensive Western option or poor Indian option in most cases. China is able to fill the gap between demand and supply in India due to its effective mass production capacity. If we ban Chinese products, it will obviously hurt the Indian middle-income group the most. The question is: can we do so at this stage when we are still suffering from the economic tensions posed by the Corona crisis? In addition, huge amounts of revenue are being generated through customs that come into state treasuries by imposing anti-dumping duties or countervailing duties on specific goods imported from China. Thus banning imports from China would cause financial losses to the country.
India still needs to build a lot of groundwork towards self-sufficiency by putting a solid force behind the campaigns of state-of-the-art R&D, capacity building, and make in India, ‘Skill India’, ‘Digital India’, ‘Start-up India’, etc. India must first reach a state of self-sufficiency and create sufficient means to build indigenously to meet the needs expressed for our vast population before making a call for the right ban on Chinese products. Nevertheless, the revolutions begin with small steps and the time has come for India to plan, prepare, and launch a well-thought-out mass movement towards self-sufficiency. subscribe chauhansameer.com free newsletter for the latest news, opinions, and editorials.