India and China both are part of World Trade Organisation. According to its rules and regulations no country can stop its imports or exports from any other country directly. China’s GDP is 5 times the GDP of India. India is highly dependent on china for its electronic products, clothing, plastic items, medicines, organic-items, machinery, etc.
China is a country which manufactures almost all types of products. This is why it is also known as “Factory of the World”. Some major companies of china which make huge profits from India are Vivo, Oppo, Huawei, Heir, etc.
India exports mostly raw materials and industrial inputs to China such as organic chemicals, mineral fuels, cotton, ores, plastic materials, etc. So we exports raw materials, while China uses these raw materials to manufacture products.
If we stop imports from china, then price of electronic products in India will highly increase which can lead to unstable markets. Most of our shopkeepers are dependent on China. There will be shortage of electronic products which will ultimately increase its price. Price of TV’s, smartphones, plastic products, etc will increase. So government cannot directly ban Chinese products. But we can boycott Chinese products. If we will not buy Chinese products then it will ultimately reduce china’s export to India. But it is not so easy.
If Indians decide to stop all imports from China, then in short term India will have to close the windows to the world by increasing the import tariffs to draconian levels of 1970s and 1980s socialist era. This will be opposed by the entire world as Indian products and services like auto-mobile, software services, diamond polishing, and refined oil exports will also meet similar reaction. This is because India is the part of World Trade Organization and has to follow all the rules and regulations of international free trade. Thus whole world will be against India in terms of trade. India will be left badly bruised in this trade war. Moreover exports to India from China form a relatively small component for China, thus India does not have a leverage on China. Also Indians have to be prepared for very expensive smart-phones, TVs and and other devices which are cheaply produced by China due to its economic strength.
The other choice is for Indian government to encourage manufacturing from India. This is the more feasible option but India currently lacks the infrastructure, technology and trained talent. This requires that Indian government encourage manufacturing in India. Current government in India in its program for “Make In India” is already trying. This should have ideally been done long ago.
The silver lining for India is just as prosperity in China has increased, the wages have also risen. Thus China in 2020’s may not be the low cost location for manufacturing for these types of goods. So the manufacturers will have to relocate to cheaper location which are also target markets, which happens to be India. Today India is 6th largest manufacturing destination and if there is suitable efforts from Government, Entrepreneurs and Investors, it can take away the mantle of “Factory of the World” from China. For that to happen, India will have to accept investments from Chinese companies like Huawei, Lenevo etc. These companies will invest only if there is favorable investment climate. Thus for the sake of India’s own interest, Chinese interests have to be respected until they don’t step on India’s toes.
China imports only 0.8% of its total imports from India while India imports 12.4% of its total imports from china.
China exports only 2.3% of its exports to India while India exports 4.3% of its exports to China.
China is India’s largest trading partner.
Indian exports to China:(2014)
The 10 major commodities exported from India to the China were:
- Cotton: $3.2 billion
- Gems, precious metals, coins: $2.5 billion
- Copper: $2.3 billion
- Ores, slag, ash: $1.3 billion
- Organic chemicals: $1.1 billion
- Salt, sulphur, stone, cement: $958.7 million
- Machines, engines, pumps: $639.7 million
- Plastics: $499.7 million
- Electronic equipment: $440 million
- Raw hides excluding furskins: $432.7 million
Chinese exports to India:(2014)
The 10 major commodities exported from the China to India were:
- Electronic equipment: $16 billion
- Machines, engines, pumps: $9.8 billion
- Organic chemicals: $6.3 billion
- Fertilizers: $2.7 billion
- Iron and steel: $2.3 billion
- Plastics: $1.7 billion
- Iron or steel products: $1.4 billion
- Gems, precious metals, coins: $1.3 billion
- Ships, boats: $1.3 billion
- Medical, technical equipment: $1.2 billion
The main reason is that we enjoyed so many Made in China things which we couldn’t dream of had they been manufactured in the West. And over the years and decades, things that were considered luxuries were within the reach of the common man and over time we couldn’t do without them – they became habits. Unfortunately either we were lazy or lacked the will or technology to manufacture the goodies ourselves.
I think the onus is on the government to continue or discontinue trade with China. Yatha Raja, tatha praja (Sanskrit for, “As the king, so are the people). Example should be set by the political class.
Some people are of the opinion that banning imports from China should be done gradually. I say NO – we will never be self reliant that way. Total boycott will definitely hurt in the beginning but ultimately we will overcome all odds.