Hyderabad:Amidst the COVID-19 pandemic and a tense military stand-off between India and China along the Line of Actual Control (LAC) in eastern Ladakh, social media was once again buzzing with calls for boycotting Chinese products.
Call for ban on Chinese products
Though there have been long-standing debates about banning Chinese goods, the demand reached its peak after COVID-19. Prime Minister Narendra Modi’s “vocal for local” campaign also encouraged Indians to use domestically made products.
“Amid these circumstances, nobody wants to buy Chinese products. Indian industries must make use of this opportunity", said Union Minister Nitin Gadkari. Trade unions also asserted that they would pressurize importers to ban products manufactured in China.
The phenomenon of Chinese goods flooding Indian markets is nothing new. Though the market invasion has been going on for years, it gained momentum in the past five years. Four of the top five smartphone brands in India are from China. In fact, these four companies account for 73 per cent of smartphone sales in India for the first quarter of 2020.
The Confederation of All India Traders (CAIT) has launched a campaign to promote Indian manufactured goods and reduce consumption of Chinese finished goods. Praveen Khandelwal, the National Secretary General of the CAIT, said that the Federation was going to urge 10,000 business associations to discontinue the import of Chinese goods.
E-commerce remains unaffected
While there has been so much debate over the ban, Chinese products continue to dominate the e-commerce segment. Amazon and Flipkart confirmed that the demand for Chinese smartphone brands like Xiaomi, Realme, OPPO and Vivo has remained unaffected. Boycotting Chinese products does not mean boycotting a China-made smartphone or toothbrush. The country has advanced beyond basic trade.
Xiaomi (Mi Credit) and OPPO (OPPO Cash) have launched online lending services. The goal is to disburse loans worth INR 50,000 crore in India through personal lending programs. Out of 30 top startups with INR 7,500 crore net worth; 18 are funded by Chinese investors. Chinese companies have invested over INR 3.02 lakh crore in tech-based Indian startups. China’s tech giant Alibaba Group has invested INR 5,284 crore in Snapdeal, INR 3,019 crore in Paytm and INR 1,887 crore in BigBasket. Another Chinese multinational company Tencent Holdings Ltd. has invested INR 1,509 crore each in Ola and Zomato.
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All these companies have created millions of jobs in India. Financial experts believe that Chinese investments must be halted in order to prevent China’s interference in Indian market.
The alternative approach
Ladakh-based Sonam Wangchuk, an innovator and education reformist; has given the call to boycott ‘Made in China’. He suggested getting rid of Chinese software or apps in a week, hardware, non-essential smartphones or laptops in a year and essential commodities within a few years.
Consumers lean towards Chinese products owing to their cheap pricing. In order to compete in the price segment, Indian government must increase tax incentives and subsidies to domestic companies. Initiatives like Atma Nirbhar Bharat must be successfully implemented to make India self-reliant. If not, boycotting Chinese products will remain an impractical goal.
In the face of globalisation and economic liberalisation, products manufactured in a country can be sold anywhere in the world. China accounts for only 3 per cent of India’s imports. But it accounts for 5.7 percent of India’s exports. In 2019, India exported goods worth INR 1.28 lakh crore to China. These exports include ornaments, iron ore and cotton. If we ban Chinese products, China too will ban Indian products. That could be a major blow to India’s economy.
Two-thirds of Active Pharmaceutical Ingredients (API) for drugs are imported from China. Indian pharmaceutical industry will be the worst hit if we decide to ban Chinese products.
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In 2018, the India-China Joint Economic Group met in Delhi to discuss the issue of trade imbalance. The central government had said that both nations agreed to further enhance bilateral trade. Amid such complications, it is not a cake walk to boycott Chinese products as proclaimed in social media.
Failed attempts in the past
In the past, various countries have unsuccessfully attempted to ban foreign products. In 1930, China boycotted Japanese products. In 2003, the US tried to boycott French products. In both cases, the attempts were met with failure.
Not just smartphones or laptops, China manufactures many essential components used in several electronic goods. Cheap labour and better trade incentives are the reasons behind China’s competitive pricing of goods.
For this reason, many countries across the world import raw material and components from China. Under these circumstances, it becomes impossible to identify Chinese a product from a non-Chinese one. If we intend to make a dent in China’s profits by boycotting Chinese products, we may have to forego several essential commodities. Otherwise, we have to buy the same commodities assembled in other countries at higher prices; which will ultimately impact the GDP.
The sooner India becomes a self-sufficient economy that produces goods at competitive prices, the easier we will be on the path to “vocal for local”.
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