Boycotting Chinese goods in India? Good luck?

Nikhil Bhave
Sunday, 16 July 2017

Nowadays, a lot of messages are doing the rounds of social media asking to boycott Chinese goods. There is an outrage against China after its pro-Pakistan stance and moves curbing India’s efforts to combat terror in the subcontinent. The logic behind the boycott call makes sense as trade is China’s biggest Achilles heel, and with enough pressure, it may just yield. There is just one question: Is it doable in India?

Nowadays, a lot of messages are doing the rounds of social media asking to boycott Chinese goods. There is an outrage against China after its pro-Pakistan stance and moves curbing India’s efforts to combat terror in the subcontinent. The logic behind the boycott call makes sense as trade is China’s biggest Achilles heel, and with enough pressure, it may just yield. There is just one question: Is it doable in India?

Taking a verbatim quote from India’s embassy in China, here are some figures showing India-China trade in numbers: In 2016, India was the 7th largest export destination for Chinese products and the 27th largest exporter to China.

India-China trade in the first four months of 2017 increased by 19.92 per cent year-on-year to US$ 26.02 billion. India’s exports to China increased by 45.29 per cent year-on-year to US$ 5.57 billion while India’s imports from China saw a year-on-year growth of 14.48 per cent to US$ 20.45 billion. In addition, another hurdle is WTO, of which India is a part. As per a Businessworld report, the total India-China bilateral trade in 2016 amounted to $70.8 billion

So what does India mostly import from China? The top commodities are electronic products, chemicals, fertilizers, plastic, iron and steel, and antibiotics, among others. India accounts for 17 per cent of China’s exports, as per available data. Worryingly enough, India has also an annual trade deficit of over $50 billion with China, As per Press Information Bureau, India’s major exports to China are iron ore, copper and cotton. All of these products are likely to be used in goods imported from China. Thus, we end up importing part of exported goods.

Will a ban work in such a condition? Electronics and chemicals form a major chunk of the commodities we import. Apart from the very obvious Chinese cell phones, even top-end firms like Apple have parts manufactured in China. Banning them is unlikely to work. And some of these firms have now set up Indian subsidiaries which make products here. A boycott will hurt them, sure. But it will also hurt the Indians associated with them. Boycott from buying that Oppo or Vivo phone will just see the entry of new players, which will have parts manufactured in China.

The one industry which will be hit hard is chemicals and pharmaceuticals. As per RIS, about 15-20 per cent of overall imports from China consists of chemicals and bulk drug components. So, a trade ban from China will end up hurting this industry badly.

So, does China hold all the cards? Not quite. Its trade surplus is one very critical factor. As per a CNBC report, the country posted a trade surplus of $509.96 billion in 2016. So, a disruption of trade is unlikely to be unilateral. But to ride out the impact, building a solid manufacturing base is a must. So, here are fingers crossed for the success of ‘Make in India’, if we have a hope of taming the dragon.

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