A clash took place between Indian and Chinese troops on 15th June, at the Galwan Valley. As a result, 20 Indian soldiers were martyred. Indians burst into anger and started burning Chinese appliances and goods. There are calls to boycott Chinese products across the country. A Union Minister also stated that restaurants selling Chinese food should be banned.
PM Modi, while addressing the nation on 12th May 2020, announced and started a campaign. He named it ‘vocal for local’, to make India a self-reliant company. During his address to the nation, he brought up a concept of “Aatma Nirbhar Bharat”, where he urged the citizens to buy and promote the local brands rather than global ones. He mentioned that all the global brands were once local. He further stated that “to achieve self-reliance, the economic package focuses on land, labour, equality, laws. The economic package of worth ₹ 20 lakh crore will help cottage industries, home industry, small scale industry, MSMEs; which are the means of livelihood for crores of people.” He motioned for India being self-reliant.
In addition to this, he said that there are five pillars on which India stands. Those are economy, technology-driven system, infrastructure, vibrant democracy, and demand. Indians nowadays, after the bloody clash, want to boycott Chinese products. But the question that arises here is that while doing so, will the five pillars continue to stand?
What are the Ground Realities?
There are many parameters that come into consideration while getting into the ground realities of boycotting Chinese products. Only after a thorough analysis of these can it come to a conclusion if Indians can afford to boycott Chinese products or not.
Why are Chinese Products Cheaper than Indian Products?
One of the major factors that contribute to cheaper Chinese products is cheap labour. In addition to this, two more factors play a major role, which is raw materials and the business ecosystem. The reason for their success is the Chinese take raw material in bulk. Thus, it saves them a lot of costs in bulk production.
When we talk about the business ecosystem, it includes the suppliers, manufactures, distributers, governments, various agencies, and customers. The Chinese government supports such industries by making the production very easy. This happens by following a value-added tax (VAT) system.
Imports of Raw Materials
India imports raw materials and finished goods from China. Examples include minerals, electronics, and steel pharmaceuticals. When we urge Indians to boycott such products, it can include only finished goods. Boycotting raw materials is not possible as it requires a strategical approach. Hence, it cannot be implemented immediately.
Drastic Change in the GDP
India imports many finished and unfinished goods from China, which involves durable goods too. These include goods like electrical devices, mobile phones, equipment, and medicines. Chinese smartphones dominate India’s smartphone market. Examples of such brands are Xiaomi, Oppo, Vivo, and Lenovo. If the imports of such products reduce or we boycott such products, then India will see a drastic change in the GDP.
Loopholes in ‘Make in India’ Campaign
The campaign launched by PM Narendra Modi to promote local manufacturing is known as the “Make in India” campaign. No doubt, it created a lot of job opportunities for thousands of workers in India. But, many Chinese firms came and established their units in India. They employed thousands of workers in their units. So, the question that arises is that when boycotting Chinese products, they may also stop their production units. Might this render thousands of workers unemployed?
China Is India’s Second Largest Trade Partner
China is one of India’s key trading partners. In fiscal year 2018-2019, India’s exports to China were $16.7 billion, while imports were $70.3 billion. This left a trade deficit of $53.6 billion. India’s highest trade deficit is from China. So from this data, it is clear that India will be the most affected country from this boycotting.
China can export to any other country. In addition, India holds a very meagre portion of China’s exports. However, these facts do not mean that India is completely incapable of boycotting Chinese products. The statistics only mean that it cannot do so in the short run. Rather, it must work out a long-term strategy.
Have We Attempted at Such Boycotting Previously?
While discussing the boycott of Chinese products, it is necessary to mention that such kinds of calls on consumers boycott are not new. Many countries have used short-term boycotting of product strategy but failed. To protest Japanese colonization in 1930, China tried boycotting Japanese products but failed. The US protested against France’s refusal to send troops by attempting to boycott French goods but failed again.
What Are the Challenges That We May Face?
The Confederation of All India Infers (CAIT) mentioned some important things to note. According to its reports on the trade deficit, if we start boycotting Chinese goods, there is a risk for import-export traders. The GDP will decline by drastic measures.
CAIT realizes that segregating Chinese products will mean making all products in India. This will be a huge challenge. We must take into consideration that 20% of auto components, 70% of electronic components, 45% of consumer durables, 40% of leather goods, and 70% of pharmaceutical ingredients which India imports are from China. Substituting all such goods will not be an easy task as the current dependency on China is huge.
Conclusion and Way Ahead
Sonam Wangchuk in his YouTube video answered questions related to boycotting Chinese products. He mentioned that we should have a strategic and systematic approach. This can lead to boycotting Chinese television sets, planes, toys etc. It will be better to stop using all Chinese apps and prepare a long-term plan.
Moreover, the strategy used by China should be used in India. The government should decrease interest rates, thus promoting Indian manufacturers. It should provide infrastructure and services to such manufacturers so as to help them compete with the Chinese giants.
The border dispute is indeed appalling. However, using it to boycott Chinese goods without systematic plans will be dangerous for India.
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