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The Surreal Notion Of Boycotting Chinese Goods

By Ritu Jacob

The India-China border tension at the Galwan valley recently escalated resulting in the death of 20 Indian soldiers on 15 June along with other ramifications. As a protest against this unwarranted intrusion of China on established Indian grounds, Indians across the country raised posters of boycotting Chinese products in India. As a developing country, aiming to touch the $5 trillion economy, can India boycott Chinese goods as the tirades narrate?



China is India’s second-largest trading partner after the U.S. India imports consumer goods and raw materials ranging from electronics, smartphones, industrial goods, vehicles, solar cells to pharmaceutical drugs in large numbers from China. While India exports goods worth $16.7 billion to China, it imports products worth $65.17 billion which adds up to a gaping trade deficit of around $50 billion. China has global economic prosperity due to its cheap mass production of diverse products which finds its way into leading economies, satisfying consumer demands. India imports a large amount of pharmaceutical drug ingredients from China. According to an article by The Wire, during the Covid-19 pandemic, India’s acquisition of Hydroxychloroquine (HCQ) which has proven to be a plausible solution for treating coronavirus, has rendered India the opportunity to export the drug globally. However, the Active Pharmaceutical Ingredients (API) or the raw materials used in HCQ is imported from China. 



The smartphone market in India is dominated by 5 brands out of which 4 are Chinese which constitutes 60% of the market namely Xiaomi, Vivo, Realme and Oppo. China’s tech investment in Indian start-ups sums up to $4 billion. Moreover, 18 out of 30 unicorns in India are Chinese funded. The reason why most investments in start-ups are from foreign countries like China and the U.S is that the lineage of businesses in India do not take the large initial risk by investing in start-ups, stated in an article published by India Today. This makes foreign investments the only source of funding. Chinese giants Alibaba and Tencent have made major investments in leading Indian companies like Bigbasket, Paytm, Zomato, Snapdeal, Byju’s, Flipkart, Ola, and Swiggy among several others. Other sectors that corroborate China’s close-knit participation in the Indian economy are the automobile sector, toy market (90% are Chinese) and the bicycle market (50%). Some investments that are made through third- party countries like Singapore and Mauritius in Indian companies are not even included as Chinese investments. The Chinese video-sharing social networking, TikTok which made it to the headlines due to censoring of anti-Chinese content, itself, has more than 200 million subscribers in India.



The above-mentioned whopping numbers make the jingoistic measure of boycotting Chinese goods questionable. Giving up Chinese goods will have both short and long-run consequences across socio-economic spheres. Moreover, it may not end on good terms as China might use its economic and diplomatic dominance and team up with neighbouring countries to go against India. If India were to completely shut off Chinese goods, it would have to look for a substitute country that imports decent quality goods at low prices. It would also mean that most products that were imported earlier would now have to be manufactured domestically. Our country does not yet have the infrastructure and technology to execute such mammoth tasks and it would be an unproductive use of human resources and capital.  



More investment means more units of production in India which means more employment. Investments in sectors of technology and skills are very crucial for India’s growth and therefore measures of retaliation need to be well thought before executing them. An article by The Diplomat mentions that the decision of boycotting goods of hostile parties has been made before by many countries but they have all turned out to be a failure. China tried to boycott Japanese products in early the 1930s as a protest against Japanese colonisation, U.S tried to boycott French goods in 2003 as a protest against France’s declining U.S request to send troops to Iraq post 9/11. The reason boycotting goods is never a success is because economics doesn’t have space for emotions and isolationism. Moreover, the rules of WTO will backfire countries in such scenarios. Globalisation has intricately linked countries and a knee jerk decision of cutting off from these connections is not the right way to go ahead. A closer look at the China-Japan relationship might help us to tide over the conundrum. In the first half of the 20th century, during the South-China Sea dispute, many Chinese people died. However, these tensions did not distort their huge trade relationship. Likewise ironing out the differences is the best solution for India and China. 



To incentivise Indian investors seeking loans, the Indian government could lower the interest rates as it could help in the development of infrastructure and services sectors. In April, the foreign direct investment (FDI) regulations were revised so as to scrutinise fresh applicants from China, however, it had spared existing investors in India. FDI regime needs to be relaxed further so that traders and investors help fuel productivity and efficiency in industries. An attempt at diversifying India’s import basket must be made to reduce the level of dependence on China. The good part is that people of our country have now realised that most of the consumer goods purchased in every household even LED bulbs have input components imported from China. This is an absolute opportunity for India to start local supply chains and be persistent in the ‘Make in India’ initiative so that the requirements for imports fall. The R&D expenditure in India must increase. It is very crucial for India to diplomatically tackle the situation without jeopardising India’s start-up ecosystem. India has come a long way from its Independence in terms of global participation and can tactfully, in unison, go further more and reach milestones. 


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