India is a very calm country. It has shown resilience in every work that it has taken in hand. The government and all the diplomats keep on trying hard to maintain that image of a peaceful country. But when we say that India is peaceful and calm, we don’t mean that it just tolerates any nonsense that the world throws at it.
In a bugle of incidents, India was hit by China in a very crucial spot. There were fatal border clashes between these two biggest countries in the world. set of events started to take place in India. A trend that was probably never thought of before. The trend was to boycott Chinese products in India. Anything or any product that was a product of China was boycotted from the market in large numbers.
All this was done in a hope that it will affect the Chinese economy in a bad way. It was done as a reply to the Chinese backlash that happened across the border. The backlash was one of a kind and was never seen before. It happened on the land of the border of India and China.
When this happened and people of India began to think that they will reduce the consumption of Chinese products up to a level zero, they didn’t think about the after-effects of this action. They didn’t even think if boycotting at a national level is even possible or not? They didn’t even think about the fact that, if this action is even possible? If you have ever wandered in this direction of thought, then this is the article for you. Here, in the article, we will discuss how the Chinese goods were boycotted and were even possible for a country like India to boycott products of China.
The India-China Clash
This is the core issue that India faced and it is also the core of the thought of boycotting Chinese products in India. China was involved in some serious backlash on the border of India. Every citizen thought of taking revenge on China. The fastest way that they could think of, was the Gandhian way. The way of boycotting anything and everything that was manufactured in China.
Anything and any product from China faced a backlash. People all over the country decided to boycott products from China. This was a patriot blind act but this really shows the zeal with which the citizens of India operate.
This was the beginning of the Anti China trend which focussed on eradicating every Chinese product from the market. People in the western Indian city of Ahmedabad hurled Chinese TV sets down their balconies, while traders in the capital, Delhi, protested by burning Chinese goods.
On the other hand, when people were hugely boycotting Chinese products, the government of India said nothing. The government of India mentioned nothing officially to the anti china sentiments that flowed in the country.
Despite the Indian government saying nothing about the boycotting of goods from the land of China, there was something that went on in the background. In the backstages, Indian public sector undertakings and all the designated departments of the government were supposed to lessen the influence of Chinese counterparts and Chinese involvement in the processes. This is something that can be seen clearly when the accounts of the government were scrutinised.
The railways were one of the organisations which hold a lot of tender for every work that it does. It was also the organisation that was reported to have cancelled a lot of work that was outsourced to some of the Chinese companies in the record. This really raises eyebrows in the direction of boycotting Chinese involvement in every major decision in India.
It was also reported that the government also asked all the electronic commerce on the internet to show the country of origin, from which the products are sold. This can be a way to promote more transparency and fluency in electronic commerce but this can also be something relating to the anti china movement.
Later in time, India took even more intense steps to stop Chinese influence and involvement in India. The government banned more than half of apps that were flagged as inappropriate in privacy and safety issues. This included very famous apps like TikTok, UC browser and the CamScanner.
After the backlash that happened because of China, the bilateral relations were obviously bad and it was proof of bad handling of relations from the side of China. China became a culprit to the whole world and trades with India worsened at the time of the clash. It was also seen that the bilateral trade between countries was already down by as much as 15 percent. This figure was the lowest since 2018.
It was also speculated that the Indian government will also impose more and more tax on the import of items from China. Which will eventually demotivate people of India to buy from China and look for other alternatives. This was a big question, the question of selection of alternatives apart from the land of China.
China, as it is known to the world, is a cheap Labour country, which can manufacture things at a very low cost. This is a very big competitive advantage that China has over the world. It is populous and it provides products that are relatively cheap than most parts of the world.
Multiple companies who are MNCs use China as a step in their supply chains all over the world. So this is a crucial question to ask. What are the alternatives to China and if India can even afford the boycott? Is it even possible to reduce products from China and still keep the growth levels up in our country? Let us discuss some reports.
Is There a Substitute for China?
As the Anti-Chinese sentiment flourished on the land of India, it was very few people who were thinking, “If not China then who ?” China is probably the biggest exporter to India in terms of the magnitude of imports from the nation. There are a lot of industries that are dependent on China in terms of materials that they require to carry on their respective productions.
“At least 70% of India’s drug intermediary needs are fulfilled by China,” Sudarshan Jain, president of the Indian Pharmaceutical Alliance, told the BBC.
Not just for India, for China too, India is a great market. Both are hugely dependent on each other but China has a competitive advantage of being at a high level of manufacturing for the world. In other words, China is the second-largest trading channel for India after the United States. This makes it really important for China to not mess up relations with India.
Another fact is that all the imports from China account for about 12 percent of sectors such as automotive components and parts, Chemicals, pharmaceuticals and consumer electronics.
India’s booming smartphone sector is also one of the sectors which heavily depends on cheap Chinese phones made by Oppo, Xiaomi and others with the majority of share in the local market.
“We are not worried about finished goods. But most players across the globe import key components such as compressors from China,” says B Thiagrajan, managing director of Blue Star Limited, an Indian manufacturer of air conditioners, air purifiers and water coolers.
He also adds that it generally takes a lot of time to set up supply chains that are local and intrinsic to a nation. For a country like India where demand is huge for every product and service, setting up a local supply chain will be a work of wonder. Especially for the products for which it is hard to find a substitute. Handicraft is a category where India imported $431 million worth of goods from China in the 2020 financial year without any significant opposite in exports.
China is a big player in not just the market of China but also in the market of India. There can be multiple occasions when investors from China invest hugely in India. There are instances when Chinese money flew out to India into Indian startups which later turned into unicorns and are now a world-renowned brand.
There are many companies that invest in India, such as the technological giants of Alibaba and Tencent, which are behind a lot of money that flows into the Indian economy through startup tunnels. The examples include a lot of famous and household names like Zomato, Paytm, Big basket and cab aggregator Ola.
All these companies were once small companies and startups which grew to become multi-million dollar ventures with help from investors all over the world. One of the investors was from China and they mean serious business when it comes to money and wealth creation for both parties.
“There have been more than 90 Chinese investments in Indian startups, most of them made over the last five years. Eighteen out of 30 Indian unicorns [tech startups valued at over $1bn] have a Chinese investor,” says Amit Bhandari, an analyst at Gateway house.
At $6.2 billion, direct Chinese investment in India appears relatively small. But, Mr Bhandari says, restricting the likes of Alibaba from creating monopolies in the Indian market will be crucial given the “outsized impact” of these investments.
The foreign direct investments are a great mention here. India has already amended its FDI (foreign direct investment) rules to stave off hostile takeovers of Indian companies.
While China has accused India of contravening WTO principles, it’s unlikely to cut ice under current circumstances "as there is no way of enforcing any decision if an intercountry conflict is cited as a reason to justify the violations”, Zulfiquar Memon, managing partner at MZM Legal, said in an email interview.
This will provide India with some freedom to reduce the dependency that it has in terms of imports from China. This is the mantra of self-reliance, which is simply the fact that you can reduce imports when you are Atma Nirbhar, or self-reliant in yourself. India has a big trade deficit that touches the number that’s nearly $50 billion.
Government’s Atma Nirbhar Bharat Scheme
When everyone is talking about boycotting China and letting the bird go out of hand, it is the question of how the land will be satiated. This can be done by finding some alternatives to China which are really rare. Or this can be achieved when Bharat becomes self-reliant in its goods and produces. This is the time when the government is promoting the self-reliant scheme in India. It is promoting and motivating every initiative that will lead to making India self-reliant in some way or the other.
So to lessen the dependence of imports among the Anti China sentiments, India is thinking of reliance. That is the reason why The government is now emphasising “Atma Nirbhar” or “self-reliance” in India. It is a term that explains some entity that is full in itself and does not need others to sustain itself. The Atma Nirbhar Bharat Yojana tries to cover five crucial things in an economy: economy, infrastructure, system, vibrant demography and demand.
In a recent report, The daily Global Times warned that “China's restraint is not weak”. It says it would “be extremely dangerous for India to allow anti-China groups to stir public opinion, thus escalating tensions”, and adds that the focus should instead be on “economic recovery”.
The domestic manufacturing sector of India can substitute as much as 25% of total imports from China, according to new findings from Acuité, a rating agency. This would lead to a reduced import bill of over $8bn in a single year.
This is a huge step towards a self-reliant India but this will introduce many retrains in the market. People would have to face some issues of supply and demand for that matter too. Mr Bhandari of Gateway House says boycotting popular Chinese apps such as TikTok might be more effective than boycotting physical goods in terms of value-added because there are multiple alternatives.
As we see that both China and India are huge storehouses of demand and supply. For India, China accounts for about 12 percent of imports in many major sectors of the country. China is the second-largest trade channel for India which is just after the United States. Thus, both the economies generate a lot of demand and supply which help both the countries in the manner they should.
The Anti-china sentiment that flew across India was a big blow to the relations and magnitude of imports and exports. This effect was deepened when the coronavirus hit the world.
As the covid 19 pandemic blew in the whole world, the demand for medicines and all the equipment that is needed by doctors increased a million times. This was the time when India’s imports from China rose in June and July 2020 by about 7.2%. At the same time, exports to China have contracted by 1.4% despite the demand slowdown due to COVID-19. The primary instruments needed in India were the PPE kits and all the emergency equipment required for treating the Covid 19 disasters.
Not just this, Chinese capital has been a very good source of foreign direct investments in India and this has broadened relationships in many ways. Both the countries benefit from this, in terms of wealth creation.
According to Invest India, there are more than 800 Chinese companies in India’s domestic market. All these factors include that India replied to China on borders a hard way. Citizens too joined the party by trying to boycott Chinese goods.
This is impossible to completely vanish Chinese produce from India but it is good to be self-reliant. The government has probably found a sweet silver line of hope in all this time of Anti China sentiment. The idea of sustainability will improve the nation-building process and is overall a sustainable method for growth.
Can India completely boycott Chinese products?
As of now, it is not possible to completely boycott Chinese goods as India is on its way to becoming a self-reliant nation. Also, there will be huge job losses as China will push their companies to stop their production in India.
Why are Chinese products popular in India?
As the products of China are somewhat cheap compared to Indian products so people prefer Chinese products.
Is China a threat to the Indian market?
Yes, China provides goods that are really cheap compared to Indian products which are affecting the small and medium business industry in India.