Can India Ban Chinese Products?
Updated: Jul 29, 2020
|By- Harshita Sharma|
China and India are the two most populous and fastest growing major economies of the world. Sino-Indo relations or the Indian Chinese relations refers to the bilateral relationship between China and India with both the countries functioning on the 1984 Trade agreement provided for most favored nation treatment. This in 1994 was further advocated by an agreement to avoid double taxation. The neighboring countries with forever growing disputes due to various reasons have successfully rebuilt diplomatic and economic ties over and over again.
However, despite the growing economic and strategic ties, India faces trade imbalance in favor of China and both the countries have failed to resolve their border dispute. With the world steaming against China due to the unfavorable pandemic, which much reportedly originated in the country, holding liable the irresponsibility for not being transparent about the information, human rights violations and muting the whistle-blowers, the country making itself an abomination cell in world politics.
Considering how India in the few past years has been striving to build cooperative and flexible relations with the major economies, there surely is international pressure to consider the shudder off policy against China.
As the standoff between the two countries still continues even during the pandemic crises, Social media is abuzz with demand for boycotting Chinese-made products. However, we need to consider a few questions over the clamor.
Why the ban?
As the strong protests against Chinese commodities are making a headway in India amid the rising agitation at the India China Lane of Actual Control (LAC) in Ladakh, the news of 20 soldiers killed by the PLA in Galwan valley has fired up the rage to boycott the products immediately. India’s traders body Confederation of All India Traders (CAIT) called out for the same. With similar pressures build up by many RSS affiliates, hashtags like #BoycottChina, #BoycottChineseProducts are currently trending the fire up the process.
People are aggrieved around the world, hit by the worst of the economic crises due to the pandemic and the sole blame of cowling up the facts and information is dawned on China. The brunt of anger is supposed to be faced by many Chinese stakeholders around the world.
There are several reasons why India is going through the ban heat up, and one of the major reasons are the murder of local manufacturing. The cost of manufacturing products in India is high due to the expensive raw material, old and traditional techniques of production, higher fixed cost with so many other reasons based on the type of industry. Due to these few reasons, India is quite behind in the race from China to compete at local and international level.
Another aspect is the huge trade deficit burdened on India in the entire Indo-Chinese trade link. India’s trade with China was $87.07 billion in 2018-19. In this duration, Indian import from China was US$70.32 in 2018-19 while Indian export to China was just US$ 16.75. It means India’s trade deficit with China was $53.57 billion in 2018-19. You can make a guess from the figures, how far is India to grab a hold on its local manufacturing units to take over China. The results have not been so favourable even after the beloved government’s make in India campaign to support the local.
What Industries are worst hit in India by Chinese imports?
India mainly imports toys, lightings, electronics products, parts of computers, cars and motorcycles, milk products, fertilizers, antibiotics, and mobiles, etc. The import cost of Chinese toys are so under the bargain basement that Indian manufacturers won’t ever be able to compete in its own local market, thanks to the taxation system.
In the economic year of 2019, only 19.2% of Indian toy market was powered by local manufacturers, the rest was throned by Chinese imports. According to a study by ASSOCHAM, 43% of Indian toy making companies have been shuttered permanently in the last five years and around 22% are on the brink of closing down.
Chinese electrical manufacturing has mowed away the few chances of Indian lighting companies to stand in the market by making India a dumping ground for its commodities. The similar deficit is over dawned on the Indian smartphone market. The reasons how China affords extensive cheap exports around the world are cheap labour, government affiliated subsidies for local production in China and mass production.
Can India impose a complete ban on Chinese products?
Well, to disappoint, no. India cannot impose a complete ban on Chinese commodities due to the rules forged by the World Trade Organization which commands that no country can cease trade relations completely from another country even if there are no diplomatic or regional relations with them.
However, the government of India can ban some Chinese products based on health and security issues.
The silver lining for Indian producers
India can scrap the previous agreements to post an anti- dumping duty with a counterpoising and countervailing duty on Chinese products to restrict their entry in Indian markets. The post imposition benefits can result in high prices of Chinese products giving a backbone to the Indian supply chain to generate employment.
Repercussions of anti-China markets in India
Indian markets from ages are price sensitive. To lead the markets here, the manufacturers have to bring in cheap goods with moderate quality. If the government imposes such bans, groups like lower middle class, middle class and people below the poverty line will be ordained to suffer.
If India will ban Chinese products so will China do. When Indian government banned Chinese mobiles without IMEI number, to avenge on, China banned Indian milk products on the basis of health concerns.
So before taking any strict actions the government has to keep in mind that India exports a share of 9% of its production to China and China exports 2% of what we’re thriving on. It’s a consequential crisis to think about, which is why India since long has been under Chinese umbrella for cheap products.
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