Boycotting Chinese products: Is it really possible for India?
Prime Minister Modi in his address to Nation on May 12, 2020, started 'vocal for local' campaign. He urged the citizens of India to buy and promote local goods and brands. Prime Minister further stated that the global brands were once local but when people started supporting them they became global.
Prime Minister's vocal for local vision was to make India self-reliant. This has led the people of the country to boycott Chinese goods and services, but the question is is it really possible? Let's find out in the article below.
It is known that India and China are the two fastest-growing economies in the world and India is one of the largest importers of Chinese goods and services in the world.
The trade deficit between India and China is the largest among the major trading partners. It is interesting to note that India imports nearly seven times more from China than it exports to it. India imports goods more than $50 billion from China and exports goods worth $2.5 billion to China.
It is a known fact that Chinese products are much cheaper than their Indian counterparts. Apart from this, the Chinese government also provides subsidies to its exporters. India spends nearly about 9% on transportation, energy, etc. but this cost is nullified by import duties imposed by India on China. To avoid import duties, many Chinese firms use trans-shipment routes-- shipping goods to Bhutan and then to India.
Can India really boycott Chinese products?
1- India imports many raw materials as well as finished products such as steel, minerals, etc. from China. When it comes to boycotting imports from China, it can only be done in the case of finished goods but the imports of raw materials from China cannot be stopped.
2- India also imports consumer durables such as electrical devices, mobile phones, cars, etc.; medicinal drugs such as leprosy medications, antibiotics, etc. from China. Also, the Chinese smartphone market accounts for $8 billion of India's smartphones market (Lenovo, Oppo, Vivo, etc.). If India plans to boycott Chinese products, then the GDP of India will contract drastically.
3- After the launch of 'Make in India' campaign by Prime Minister Modi, many Chinese firms have installed their units in India, which has employed hundreds of thousands of workers in India. If India boycotts Chinese products then these companies may face pressure from Chinese Officials to stop their production in India, which may leave hundreds of workers unemployed.
4- As mentioned above, India imports nearly seven times more from China than it exports. If India plans to boycott Chinese products than finding a substitute which can match the cost and availability is nearly impossible. Thus, the GDP of India may contract.
5- It is interesting to note that almost every product that we use, has a bit of China in it. The smartphones, laptops, air conditioners, etc. that we use in our daily life has some parts manufactured in China.
We must understand that the current process of manufacturing is interconnected. For instance, a phone is manufactured with the help of Chinese labours and land, has investment from a different country say the US, has an innovation from Japan and could end up having Made in India apps. Each product has the same process when it comes to labour, investment, innovation, etc. Thus, it can be concluded that each nation can't be segregated and neither its good can be boycotted.
Many countries in the world started boycotting products from different countries but failed due to the complex manufacturing process. A few of them are listed below:
1- In 1930, China tried boycotting all the Japenese products to protest against Japenese colonization but failed.
2- In 2003, the US attempted to boycott French goods to protest against France's refusal over sending troops to Iraq post 9/11 but failed again.
So is there any alternative?
Recently, Sonam Wangchuk answered many questions on boycotting Chinese products. He stated that Customer is the King. This means that consumers must stop using Chinese products. He gave a mantra to boycott made in China software in a week, hardware in a year, finished and non-essential products in a year and essential products, raw materials, etc. in coming years in a systematic way.
We can also implement an import-substitution method in India to boycott Chinese products. This means that the products we import from China could be manufactured in India, but this is impossible in the short run.
The Government of India must lower the rates at which the loans are issued to the Indian companies, just like China. In addition to this, the government must provide infrastructure, services, etc. to prepare Indian companies to compete with China. India can boycott Made in China products but in a systematic and planned way as stated by Sonam Wangchuck.