How boycott of Chinese goods is a requisite now more than ever.
Boycott China meaning boycotting Chinese goods or services, is a slogan used in an online campaign that shows a common interest of the people denoting, not using, or buying products either made or sold by Chinese companies.
Amidst these high-level tensions between India and China, everyone is thinking about how India can go #localkeliyevocal. Various articles talk about hard it is going to be for India to switch to mass domestic manufacturing. This article talks about the extreme losses we are facing while trading with China and shares how switching on #makeinindia products is the requirement for the long term benefit of the economy.
Statistics of India’s exports to China
· India’s exports to China were more than 1.17 Lakh Crore in 2018–19
· These exports constitute just 5% of the total exports of India.
·Our exports majorly consist of India’s key resources like Iron ore, cotton, organic chemicals, etc.
The negative impact of the above exports:
The above exports constitute more than 70% of our exports to China. As we can observe, our exports primarily consists of raw materials required for manufacturing anything from pin to plane. Raw materials are a pre-requisite for creating any product. By exporting these resources, we stop the future growth prospects for our country and provide the key resources for growth to other countries. Even after having the 4th largest iron ore reserves in the world ¹, why does China still has to import the iron ore? China is smart as it is using all the natural resources of other countries and imposing serious laws and regulations on the usage and extraction of their resources. The benefit they’ll have in long term is that when the countries’ resources will exhaust, they can either choose to export their own at extremely high costs and use theirs at no cost. Which either ways is a win-win situation for China.
The above observation was also made by Virbhadra Singh in 2010 itself when he was the Steel Minister of India. He called for banning the exports of Iron ore and conserve it like the US and China.²
Advantages of curbing exports:
By reducing the current exports, we can use the resources required at present and conserve the rest for future use and generations. Simultaneously our focus should be on the mass conversion of our natural resources to finished goods. This will help us to grow our many by multifold times.
Statistics of India’s Imports from China
· India imported 5 Lakh Crore worth of goods from China in 2018–19.
· This constitutes to around 13.5% of India’s total imports.
· Our imports majorly include buying finished goods like toys, television and monitors, travel goods, audio accessories, digital cameras, furniture, and everything you can imagine.
The above image represents India’s major imports, constituting to around 50% of India’s total imports. The imports are majorly consists of either finished goods or semi-processed raw materials. The following mentioned is the negative impact of the imports from china followed by the advantages of import substitution.
Negative impact of imports from China:
Apart from the basic demerits of imports ³, we all know that imports from China are not just ‘not-so-helpful’ in economic growth but are also poor quality as far was what we all have experienced. This becomes much more of as it is a no win situation for India. First we import products, suffer using them, again buy products from China. This is deteriorating our country and will deteriorate it more in the long run if it continues seeing that India imports a huge amount of plastic products from China. From small toys, to dispensers, fashion accessories, anything we image is usually of plastic and probably was imported from China.
According to Global Sustainable Competitiveness Index, India has been ranked 130 on sustainability whereas China has been ranked at 37, which is a huge difference and shows their efficiency and also pointing out at our intolerable exports.⁴
In 2018–19 India had a trade deficit of $70 billion just with China. That trade deficit is much more boon practically than theoretically as what we export are high quality raw materials and receive products that have to be replaced frequently.
A study shows that India can reduce trade deficit with China by $8.4 bn. This can happen without any additional investments, and domestic manufacturing sector can substitute 25% of the total imports. Trading with China, contributes as much as 30% of India’s trade deficit.⁵
Advantages of Import Substitution:
· Good quality product at much lower prices (as we’d also be saving on import duties, anti-dumping, international transportation costs, or any other product specific duties).
· Domestic manufacturing over time will also allow India to export to other countries. This is an achievable target as it is feasible for India in all ways like good demographics of workforce, natural and artificial resources etc.
· Domestic manufacturing will also provide large amount of employment also at good pay scale. This will eventually raise per-capita and will pave a new path for India’s growth.
· We’d save our foreign exchange and will make our currency stronger by exporting Make In India products.
Opportunity Analysis
The below table classifies various products that are imported in vast quantities into 2 categories. The first category includes all those products on which India, can switch to manufacturing in short term and without much know-how. In contrast, the category 2 includes products that require some good know-how but can be made with developed countries’ alliances.
Key takeaways:
· Reduce dependence on China for imports, especially of finished products.
· Shift the focus towards Domestic manufacturing.
· Focus on conversion of Natural resources or raw materials to finished or semi-finished products.
· Saving the surplus ores/minerals for future rather that exporting the surplus.
Boycott China is a basically a part of the series of the campaign, Make in India and Local Ke Liye Vocal. Our aim here is to focus on the point that how India should be self-reliable and resourceful enough to be able to create and provide anything that its citizen look towards.
References:
¹ Statista. 2020. World Iron Ore Reserves By Country 2018 | Statista. [online] Available at: <https://www.statista.com/statistics/267381/world-reserves-of-iron-ore-by-country/>.
² The Economic Times. 2020. Ban Iron Ore Exports; Conserve It Like US, China: Steel Minister. [online] Available at: <https://economictimes.indiatimes.com/news/economy/foreign-trade/ban-iron-ore-exports-conserve-it-like-us-china-steel-minister/articleshow/6845431.cms?from=mdr>.
³ Snipboard.io. 2020. Upload And Share Screenshots And Images — Print Screen Online | Snipboard.Io. [online] Available at: <https://snipboard.io/2I6W04.jpg> .
⁴ SolAbility. 2020. The Global Sustainable Competitiveness Index. [online] Available at: <http://solability.com/the-global-sustainable-competitiveness-index/the-index>.
⁵ The Hindu. 2020. India Can Reduce Trade Deficit With China By $8.4 Bn: Study. [online] Available at: <https://www.thehindu.com/business/Economy/india-can-reduce-trade-deficit-with-china-by-84-bn-study/article31893193.ece> .
⁶ Moneycontrol. 2020. How Dependent Is India On China? Here Is What Trade Data Reveals. [online] Available at: <https://www.moneycontrol.com/news/business/moneycontrol-research/how-dependent-is-india-on-china-here-is-what-trade-data-reveals-5346201.html>.
