Can India boycott Chinese products completely ?

- July 05, 2020

Last month, When PM Narendra Modi in his address to the nation, gave a clear call for an 'Atmanirbhar Bharat', a message seemed to have developed amongst the masses against the products that we import. This expression was more specifically targeted towards our immediate neighbor, China- a country that has been declared guilty of spreading and even manufacturing the novel coronavirus.
Not too far from the LAC (Line of Actual Control) in Ladakh, Sonam Wangchuk, engineer, innovator, and the inspiration behind popular Hindi film 3 idiots, took to social media platform to promote the boycott of all products made in China. Wangchuck's video crossed 20L views in two days but he went on to assert that these should be converted into something concrete that would bite the Chinese government.
With all this in the air, the billion-dollar question that needs an immediate answer is how feasible is it to talk about insulating ourselves from the flooding of material from this global trade giant.

Ground Realities

Now let's discuss some trade figures to ascertain the impact. Trade figures tell that India is the largest importer of Chinese consumer goods. India imports around Seven-time more from China then it exports to it. India has a massive trade deficit with China - its largest with any country. In FY 2018-19, India's exports to China were USD 16.7 Billion, while imports were USD 70.3 Billion, resulting in a trade deficit of USD 53.6 Billion. We must acknowledge that Chinas' exports to India account for a mere 2% of its total exports, so even if we boycott all the goods imported from China, it will not make a BIG IMPACT on China. Data also shows that China is India's largest trading partner, but the trade is heavily inclined in favor of China. Thus initiating a trade war when Indian manufacturing ability is limited is not going to work in favor of India.

The pace of becoming Atma Nirbhar

The verbal chants and calls for boycott China won't buy us Atmanirbhar Bharat or self-reliance. A systematic blueprint needs to be framed and put in action.

Initially, An import substitution mechanism needs to be worked out, by creating such a product alternative that can compete with China both in aspects of Price and Quality. Low Research & Development expenditure, particularly from the private sector, is a key challenge facing the innovation ecosystem in India.

Secondly, The Govt., just like China, should lower the rates at which loans are issued to Indian Companies. Last month, FM Nirmala Sitharaman announced a stimulus package to address the needs of sectors battling for survival. Now, steps should be taken in direction for ensuring that these announcements are actually implemented on the ground level and are not reduced to hollow promises. Also, the government must provide services, infra, etc. to prepare Indian companies to compete.

Thirdly, The FDI (Foreign Direct Investment) regime needs to be further liberalized. India receives a mere 25% of the FDI that China gets and only 10% of what the US receives. An increase in the levels may provide the necessary nudge to our industrial sector to surge towards better efficiency and productivity.

Past Attempts

It is important to acknowledge that movements of these kinds of consumer boycott are hardly unique or new. History testifies that such attempts have been made in past several times but never resulted in much success. In the early 1930s, China also tried to boycott all Japanese products to protest against Japanese colonization. Similarly, In 2003, US consumer forums tried to boycott French goods to protest against France declining to send troops to Iraq post 9/11.

What these events have in common is that none of them were successful in boycotting the other, and dissipated within a few weeks. The reason for failure was simple, Economics defies all shackles perpetuated by emotions and isolationism.

#OPINION

Hyper-nationalism and Jingoism can never provide a solution to the problems and hence efforts should be made in the right direction to resolve regional disputes through consultation and dialogue.

This makes it important to maintain close exchanges at the highest levels to iron out differences.

Encouraging Indian companies to participate in the China International Import Exp and Increasing Mutual Investment will strengthen bonds between the two giants. We should acknowledge that China has a strategic role to play in India's growth.

Coronavirus has taught us that a battered economy affects all of us in the globalized period. Thus, aspiring for a strong and concrete India-China relationship is imperative not only for the mutual benefit of the people but also for the economies and the world.

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