20 October, 1975: 4 Assam Rifles jawans were killed in Tulung La, Arunachal Pradesh by Chinese forces. After a long gap of 45 years, we again witnessed a violent clash between Indian and Chinese troops in the Galway valley in which 20 of our soldiers died. Now while tensions between the two countries have skyrocketed, the calls for the ban on Chinese goods have become louder than ever. Every day now we are witnessing protests, both offline and in social media, against China and Chinese products. But is it really feasible to do so and ban Chinese goods?
Let’s look at the ground realities now. China is the second-largest trading partner of India, behind the US. India has a trade surplus with the US, meaning it exports more to the US than it imports from them. However, in the case of China, India has a trade deficit, meaning it is importing more than it exports. In 2018-19, India has a trade surplus of USD 16.85 billion with the US, while it has a deficit of USD 53.56 billion with China.
While the trade between India and China has been decreasing for a few years now, data shows that it is highly unlikely that it can stop in the near future. This is because 20% of the auto components and 70% of electronic components come from China. Similarly, 45% of consumer durables, 70% of APIs and 40% of leather goods imported are from China. Other than physical goods, Chinese tech and investments have penetrated all sectors of the Indian economy in such a way that it is rare now to find an area which doesn’t have anything related to China.
Having worked in the pharma sector, I have noticed that most of the imported raw materials in our company were of Chinese origin. Chinese pharma companies are able to provide materials at quite cheap rates in comparison to other countries. The cost of such raw materials from other European countries and the US is almost double the cost. In the current scenario, there is no other alternative source for pharma raw materials other than China. Even a basic paracetamol tablet is manufactured using raw materials from China. The raw material’s manufacturers in India are too few and much costlier than their Chinese counterparts. Now, do you think it would really be feasible to ban these Chinese goods? The cost of medicines would shoot up drastically in the unlikely event of such happening.
Coming to the smartphone segment, the Indian market is dominated by the Chinese brands with Xiaomi, Oppo, Vivo, Realme, Oneplus and many others. The Chinese companies have set up manufacturing plants in India and now all the phones are produced locally. Besides, these companies have also expanded their portfolio to include many other consumer electronic products and all of them at a cheaper cost to their competitors.
Let me take an example of the low and mid-range smartphone segment in India which has the highest sales on the basis of quantities. In this segment, it is impossible to find an alternative brand which can match the specification and components given by the Chinese companies. Only one other is still visible here: Samsung.
However, when we compare a Samsung mid or low range device with the other Chinese devices, we see that the Samsung devices lag behind in almost all the aspects. Before the smartphone era, Chinese mobiles were not much visible in the market but now that scenario has totally changed. Indian companies like Micromax, Intex etc have entirely disappeared from the market. From the customer’s point of view also, we can’t expect a person to buy a non-Chinese phone at a price where he can get a Chinese phone of much better quality.
Frankly speaking, it is quite an impossible task to immediately ban all Chinese products in the current scenario. Moreover, in today’s world due to globalisation, no single finished product is manufactured in a single country. Let’s take the example of Apple’s iPhone. Many know that it is manufactured in China but is it really?
As we can see, various components of the iPhone are sourced from different manufacturers based in different countries. Assembling of those components happens in China. Now, do you think it’s so easy to classify any product as that of a particular country?
Chinese investments in Indian firms are humongous. While people are sharing WhatsApp messages regarding banning few Chinese apps like Tik Tok, Camscanner etc, they tend to forget that extremely popular apps like Paytm, Flipkart, Zomato, MakeMyTrip all have Chinese investments, either in small or big quantities. Even Indian banks have Chinese investments. People’s Bank of China (PBOC) has a stake of 1.01% in HDFC, perhaps the most popular private bank in India.
While it would be prudent not to make any big prediction regarding what steps should be taken, I do believe we should start at the lowest level to get rid of the Chinese menace. Our popular festivals like Holi and Diwali have come under Chinese influence nowadays. The colours of Holi and the lights and decorations of Diwali are mostly imported from China now.
And people prefer them because of their low cost as a result of which, our indigenous manufacturers are incurring huge losses and shutting down businesses. Same can be seen in the case of traditional Banarasi sarees which is under threat from cheap Chinese imports. It’s high time now we start showing our support to our own small scale industries and help them recapture their lost market share. The government should also provide their support and ensure that the various schemes and incentives launched for the MSME sector do reach their intended beneficiaries.
Now it remains to be seen what steps the government takes in regard to the calls for a boycott of Chinese goods. While it’s a given that drastic measures probably won’t be taken considering the current state of the Indian economy, most experts have advised caution. Because in the economic sector, against China, India has a lot of catching up to do. Any such boycott measures now will only result in only one loser, and that surely won’t be China.