CALLS FOR BOYCOTT CHINESE PRODUCTS-CAN INDIA PUT PRESSURE ON CHINESE ECONOMY?
Within a year, it is second time erupt the buzz on the social media to boycott Chinese products in India. Many Indians believes that trade is one of the best weapons to combat instead of the military with China. These Indians have a daydream thoughts that India is the only largest market which China have and if we boycott Chinese products, China will be stuck into the Crisis. Meanwhile, production in India will boost and employment will create which eventually leads India towards the prosperity. But the crunch is that it is not as simple as look like. Although the voice of India has been wildfire about the banning Chinese goods, the government attitude has been passive for certain reasons. If we look at the current scenario, it is not a sensible decision to boycott Chinese products for India.
WHY SHOULD INDIA BOYCOTT CHINESE PRODUCTS
According to General Administration of Customs (GAC), the bilateral between India and China amounted of $70.8 billion in 2016. India imported $58.3 billion worth of goods while exports pegged at only $11.8 billion. The trade deficit between India and China has mounted at $46.5 billion which is biggest between any two countries. The major products exported by China include consumer electronics, equipment, electric machinery, computer hardware and peripherals, telecom instruments, active pharmaceutical ingredients, organic chemical, iron, and steel.
|Machinery and equipments||11.1%|
|Ships and Boats||1.5%|
The relationship between India and China is always a vacillate. India has certain political and strategical reasons for boycotting the China made products. The calls for banning the Chinese products have been picking up on social media since the last year festival (Diwali) season.
- China refused to accept Jaish-e-Mohammed chief Masoor Azhar (who is responsible for 2008 Mumbai attack and 2016 Pathankot attack) as an international terrorist.
- Due to having a fear of competition, China is not supporting India’s bid to become a member of NSG (Nuclear Suppliers Group). India is just behind the China and India will be the only competitor of the China in foreseen future.
- China is an imperialist country and now they infiltrate on the border of Indian province Sikkim.
- The world’s biggest bilateral trade deficit lies between India and China. Indian imports from China were nearly five times more than exports in 2016. The adverse impacts of trade deficit gradually trapping the Indian manufacturing sector and forex reserve.
- Currently, China is combating with the pollution issue and wage inflation. So, India has a golden opportunity to avail by promoting the manufacturing industry.
- The relationship between China and Pakistan is strategically not good for India. Through CPEC (China Pakistan Economic Corridor), one of the aims of red dragon is to deploy troops at Gwadar (territory of Pakistan) to control the central Asia and India.
WHY SHOULD NOT INDIA BOYCOTT CHINESE PRODUCTS
Despite having an ample reason for boycott Chinese products, India is not in a position to do so. It will put the economic pressure on India rather than on China. Many small and medium traders are buying goods from China and many large companies have contracts with Chinese companies for the job work. Immediate ban leads India towards the economic chaos.
- The government of India is also bounded by norms of World Trade Organisation. So, the complete boycott of Chinese made products is the nightmare for India. The Commerce Minister of India, Nirmala Sitharaman said during question hour that, “complete ban of import from any country is not technically possible now due to World Trade Organisation rules just because of we have problems diplomatically, territorially or militarily”.
- India should forget that by banning the Chinese goods, we can put pressures on the Chinese economy. China is world’s largest trading partner with total exports amounted to $2276.5 billion in 2015 out of which only $61 billion export to India. So, apparently come to know that China does not rely on India for the market. If we ban the Chinese goods, China can absorb the thrust at a marginal cost.
- The roots of the Chinese goods are so deepened in Indian market that now it is too late to immediate boycott. India is one of the largest consumer markets. The contribution of the consumer goods is the most in a total import from the China. Many Chinese companies have made its own space in Indian market at the same time many small and medium traders imports consumer goods only.
- As compared to India, China made products are cheap and durable. Their expertise is to make a quality proposition at a very cheap rate. If India suddenly stops the Chinese products, its implications will be disastrous for the Indian economy. We don’t have the technology to fulfill the demand which leads to the price hike. Eventually, India will be the victim of high inflation, unemployment, and jaded growth.
- The immediate boycott of Chinese products will lead India towards either expensive western substitute which most of the Indian could not afford or sub-standard Indian products which are not valued for money for Indians.
- The government of India takes a great initiative ‘Make in India’ to encourage the manufacturing industry. The success of the make in India also depends upon the China because for many small and medium entrepreneurs have China as an only source for raw materials, tools, and machinery. Due to prevailing issues, many machinery manufacturers import every component from China and assemble those in India to give them a touch of ‘Make in India’ product.
- China has established themselves as a world’s factory. China makes available not advance but cutting edge technology at a very cheap rate that is the main reason why people around the world using the Chinese products especially electronics products. Most of the components which are using in electronics products are only manufactured in China. For instance, As we know that now many cell phone companies like Xiaomi Inc are manufacturing phones in India but the dark side for India, is that those companies are only assembling phone here otherwise every component coming from the China.
- The contribution of the IT and pharmaceutical industry in the Indian economy is remarkable. If India stops imports from China, both the industry will breakdown in proximate future. For the IT, computer hardware and peripherals and up to 70% of APIs (Active Pharmaceutical Ingredients) are importing from the China. Both are the backbone of their industries.
- If we stop Chinese products, we will also lose 4.8% of the exports because China is one of the largest importers of Indian goods. China is importing auto engine components, tea, pharmaceuticals, metal based products, medical equipment, marine foods from India.
- China has been gradually becoming a driving economy of the world economies. Now, it shows case itself as a next generation super power. The United States is losing its command over the world economy. Meanwhile, India is also growing like anything but we highly depend upon the China for the further development. Although it is the indigestible truth, we have to accept that we need China more than it needs India.
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HOW MUCH INDIA NEED CHINA
The true picture is somewhat different from what we are seeing right now. We here not include any trade from the HongKong which is also one of the largest traders of India. Traders from Hongkong buying goods from China and exporting those to India. Add to that, Illegal trade taking place through courier companies, for instance, refurbish smartphones. Before GST, most of the goods were under valued and it was also easily cleared from customs due to the corrupt blood of the government servants (exceptions always there).
- As a part of the renewable energy, Indian government promoting the solar energy projects. Between April 2016 to January 2017, 87% of the solar plant equipment was imported from the China.
- The major funding of the Flipkart and Paytm comes from China based Tencent Inc. and Alibaba respectively.
- The spending on Infrastructure projects is growing but most of the machinery in construction projects are importing from China. Sany and Lugong are the main suppliers of the construction equipment in India.
- The main supplier of the telecom equipment are Huawei and ZTE, both are Chinese companies.
- Four mobile phone companies (Xiaomi, Lenovo, Oppo, and Vivo) out five largest mobile phone vendors in India belong to China. They dominating Indian smartphone market by enjoying more than 50% market share.
Today, social media is no more only for entertainment. It also used for advertisements and spreading the humor and news. The campaign of boycotting Chinese products is also the consequences of social media. Many people using social media platform deliberately for the wrong purpose. I am not here giving you few of the rich example of the social media messages. They have been exaggerating the matters without knowing the outcomes of the same. As far as concern of boycott of Chinese made products, New Delhi and Beijing must have to negotiate the prevailing matters mutually and trade must have to keep aside. It will not invite ‘acche din’ for any of the countries.
An immediate ban of Chinese goods will not be a practical idea for India to teach them a lesson. If India really wants to avoid Chinese product, Indian government must have to pay keen attention to the manufacturing industry. Indian manufacturing sector has to grow from the foundation. We must have to bring our production cost down by anyhow. We have to offer the products which match the international standard. At the same time, We don’t have the infrastructure, technology and government support (not on paper). However, we are morally correct that we must have to stop using Chinese products, economically, it is the worst idea. Unfortunately, Due to not having even a ground for production, we are unable to compete with China in proximate future.