Is India Cutting down Its Own Vein By Boycotting Chinese Goods ?
By Amir Ali June 30,2020
"There was nothing wrong in imports to spur growth but wondered why even Ganesha idols should be bought from China.",
“Today, why even Ganesha idols are imported from China..why such a situation...can’t we make a Ganesha idol from clay, is it the situation?” said the Finance minister of Nirmala Sitaraman,on Thursday at the launch of 'Garib Kalyan Rojgar Abhiyan' on June20,2020.
https://www.hindustantimes.com/business-news/why-import-even-ganesha-idols-from-china-nirmala-sitharaman-in-push-for-self-reliance/story-zAbQw4b8vzH4GgM9ega6UI.html
The statement clearly reflects the dependency of India's economy on China.
But,after the deadly encounter of Indian and Chinese soldiers in Galwan valley on 15th June,2020 ;which resulted in the death of 20 Indian soldiers.The demand for boycotting the Chinese goods has been rising all over India.Posts and videos are rolling across the print,electronic and social media to boycott the Chinese products.People are on the streets and setting the China made goods on bonfire.But,the big question is that,"Is India cutting its own vein by boycotting Chinese goods?"
Statistics say that India's decision of boycotting the Chinese products would harm India more than China.So,let's throw a light on the stats.
SHARE OF CHINA IN COMMODITY MARKET
A report published in the Hindu newspaper says that ; in the Financial year 2019, India have exported 5.1% of its total.exports to China whereas Chine has exported 3% of its exports to India .On the other hand,13.7% of India’s imports were from China, while China imports just 0.9% from India.Also in the year 2020, India have imported 14% imports from China till Feb 2020 and this is the highest share among all the nations.
The major imports to India from China are — electromechanical products, Chemical products,cheap metals,plastics rubber and textile.
- 76.3% of all antibiotics imported by India are from China.
- Chinese smartphone brands have a market share of about 72% in India, dominating every price segment.
- China's share in solar power products is about 90% of the local market.
- Share of auto components from China is about 26 percent.
- Telecom equipments account for 25% according to the report of Global Times newspaper
- A report published in the Times of India newspaper says that 68% of the total bulk drugs and intermediates are imported from China every year.
These figures clearly reflects that Indian commodity market is dominated by the Chinese products.But unfortunately,not only the goods market but also the financial sector of Indian economy has a huge share of China owned financial cooperations. Let’s have a look at the current situation in the financial sector.
SHARE OF CHINA IN FINANCIAL SECTOR
When it comes to the Foreign Direct Investment (FDI),China dominates the Indian financial sector.Majority of the India's top 30 startups have been funded by Chinese giants like— Alibaba,ByteDance,Tencent which have a valuation of over $1 billion.
- Chinese Tech giants like Alibaba, ByteDance and Tencent, have funded 92 Indian start-ups including unicorns such as India’s largest digital payment platform Paytm, school learning app Byju’s, Indian hotel chain Oyo and share-riding company Ola.
- Recently,TikTok, the short-video platform owned by ByteDance, has overrunYouTube with more than 200 million subscribers.
- In 2019, 47 deals were signed between Indian startups and Chinese investors to fund Indian startups which was approximately equal to 1.20 billion US dollars.
- Although now Inida has banned 59 Chinese apps but while shouting aloud a call to boycott of the Chinese products one should keep in mind the probable consequences which could happen if Chinese investors take out their money from Indian financial sector.
(Source : Statista)
IMPACT ON THE SMALL AND MEDIUM SCALE BUSINESSES
The worst effect of this boycott would be probably seen on the small and medium scale businesses.These are the Indians who already have a large stock of Chinese products.So, doesn’t it is senseless to boycott or destroy those products since it would cause no harm to China since it has already received the payment of those products ? Actually, it would be a harsh jerk to the India’s medium and small businesses owners.
According to Han Feng, a professor at Beijing Foreign Studies University and an Indian affairs expert said to Global Times,
"Economic nationalist stick-waving by India's elite after the recent border clash would deny the Indian poor cost-effective Chinese goods, thus denying them their right to a better life"
https://www.globaltimes.cn/content/1192617.shtml
Steve H. Hanke, Professor of Applied Economics at the John Hopkins University, suggested in an interview conducted through an email mail Global Times that instead of engaging into a military conflict with China, India should focus on its economic reforms.
Mr. Thiagrajan, managing director of Blue Star Limited, an Indian manufacturer of air conditioners, air purifiers and water coolers said to BBC in an interview,“We are not worried about finished goods. But most players across the globe import key components such as compressors from China,” .
https://www.bbc.com/news/world-asia-india-53150898
INDIAN NEIGHBOURS
The closure of bilateral trade relations with China will give ample opportunity to Indian economic competitors to strengthen their relationships with the Dragon.
- Bangladesh, one of India’s textile competitors, may replace some of India’s textile exports to China, further worsening India’s trade deficit with China.
- Pakistan, on the other hand; already a close friend and economic partner of China.Many political experts also conclude that China’s active presence in the LAC is one the step to advance into Central Asia through the Silk route in collaboration with Pakistan .
- Tensions between Nepal-India have already built Nepal and India since both of the neighbours are claiming Lipulekh,Kalpanni and Lipiyadhura as theirs.
- According to a report of the Hindu on May 13, China has already approved a $500 million loan from its development bank to help with countering the impact of the pandemic. Chinese Embassy officials in Colombo told the Hindu that the two countries are working together on financial cooperation “via different channels and mechanisms”.
Apparently,China is not only encircling India economically but also politically by strengthening its ties with common neighbours of both China and India.Considering, all these factors it would curicial to see what would be New Delhi’s next move to counter the consequences following the boycott of the Chinese products.