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Boycott of Chinese Goods: Challenges Ahead

 –By Economic Affairs Correspondent

After the martyrdom of 20 brave soldiers  of Indian army  in the clashes with Chinese forces in Galwan Valley, there is growing demand for the boycott of Chinese goods in various circles and thereby punish China economically. But the question arises whether it is feasible for India or is it a knee-jerk reaction?

India-China trade is around $80 billion where China enjoys trade surplus. China is famous for dumping of goods at cheaper price. This is one of the reasons that India did not join Regional Comprehensive Economic Partnership (RCEP) as it would result into further dumping of Chinese goods in Indian market.

So, there are sectors in which Indian companies can replace Chinese companies gradually. Moreover, Indian government imposes anti-dumping duty on Chinese goods to a limited extent as India is a member of WTO (World Trade Organization).

But there are issues in replacing Chinese goods in some sectors. Chinese smartphone companies capture around 72 per cent of India’s market as Chinese companies provide smartphones with very high specifications at a cheaper rate. Replacing them is not an easier task as we would witness rise in their prices if they are replaced by indigenous ones or smartphones manufactured in nations other than China, for example, South Korea, Japan, etc.

Chinese companies occupy almost 26 per cent of the auto components. If we replace them with indigenous firms, perhaps it may not be feasible in the short term or if so then the prices in the automobile sector may rise. In turn the already sulking automobile industry may witness another blow.

In Economics, it is always preferred that a country should be less dependent on imports and should be more self-reliant or should export more. This would help the nation in making the forex reserve healthy. Moreover, India’s continued dependence on imports weakens the rupee which in turn makes the import costlier.

Recently, a renowned industrialist had said that we import not because we want, but we have little choice in the matter because either the product is not made in India, or if made in India then it is too costly. He further said that the ultimate goal we have to achieve is to make Indian manufacturing competitive so that we can be less dependent on Chinese manufacture.

Moreover, two-thirds of the total imports of Bulk Drugs/ Drug Intermediates come from China, according to PIB. Hence replacing Chinese goods especially in the midst of the COVID-19 pandemic is easier said than done.

We are living in an era of Complex Interdependence (a concept given by Robert Keohane and Jospeh Nye) where nations are linked to each other in various ways. It is said that the business between two nations (here India and China) are so interlinked that one cannot harm the other economically without harming itself. This is the very reason why even USA cannot completely cut off trade ties with China as both the economies are extremely linked and China plays a big role in Global Supply Chain.

Thus, India has  to take either of the two paths—the first one is increasing stake of Chinese economy in India and vice-versa so that China can never think of making India the enemy, and the second one becoming less dependent on Chinese imports by making India ‘Atmnirbhar’ which can be achieved only when Make in India becomes successful.

But both the above measures require time and can be considered as a long term goal. If we start stopping the already existing Chinese establishments in India then perhaps unemployment in India will further increase and it will be detrimental to the Indian Economy as we are suffering from the rise in unemployment which has been aggravated by the COVID-19 pandemic.

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