1. With Bapu missing, a short war with China could stem China imports and boost Make In India

With Bapu missing, a short war with China could stem China imports and boost Make In India

Prospects of war with China on Dokolam has sparked a blood bath at the Dalal Street. But if it is able to create an anti-China import sentiment, the manufacturing sector could breathe.

Published: August 21, 2017 7:08 PM
doklam standoff, india china, india china news, india china latest news, india china trade, china india trade, mahatma gandhi, make in india, chinese products, china products in india Much as the Modi Government talks about ‘Make in India’, they have not been able to stem the tide of rising imports from China. (Reuters)

Sandip Sen

Prospects of war with China on Dokolam has sparked a blood bath at the Dalal Street. But if it is able to create an anti-China import sentiment, the manufacturing sector could breathe.

Much as the Modi Government talks about ‘Make in India’, they have not been able to stem the tide of rising imports from China. Nor have they been able to drive up the imports to China. The situation is pretty distressing for the manufacturers in India. From public sector energy major BHEL to private sector Tata Steel, they have been all pushed to the corner by rampant Chinese imports.

Government support to manufacturing missing.

And unlike the Chinese Government which supports its industry directly and indirectly, the Indian Government does not. Many manufacturers feel that the despite the talk of Make in India , the Modi Government is as indifferent as the Manmohan Singh Government to the manufacturing industry. This unfortunately is confirmed by data. Replying to the Indian parliament, the commerce minister Ms Nirmala Sitharaman admitted that the trade deficit with China has been rising. The data from the ministry website is revealing.

The difference is in goods financing

Last year China accounted for 16% of our import bill selling us $61.7 billion of goods. They included telecom and power sector equipment, lighting, instruments, computer hardware, peripherals, electronic products, project equipment, steel and fertilizer among other goods. Around 90% of the imports were made on price points where Indian goods of same or better quality existed but not at Chinese prices or payment terms. In China such imports would have been very difficult to do. But in India financing of goods is still a nightmare, and credit based imports from China fill the gap. The Indian power and the fertilizer sector suffer the most due to such imports.

Trade deficit is widening

As a matter of fact China is aggressively tightening up its import policy and the Indian imports to China has been dipping since the last five years. India’s export to China shrunk to $9.05 billion last year and the trade deficit grew to $52.65 billion. Five years ago the trade deficit with China was 38.67 billion. When the Modi Government came to power in the year 2014-15 the trade deficit with China was $48.45 billion.

Financing of Chinese imports is the key

Apart from the above three sectors of telecom, steel and power there are around 30 industries where Chinese imports are rampant. This because of the support of Chinese funding to their exports. As a result the traders lobby which handles the imports from China is growing stronger and financially and politically influential. It is virtually impossible to stop Chinese imports because of bank rolled goods China pumps abroad. The Bank of China has a notoriously liberal policy of funding exports and projects that substitute imports. They have even undermined larger economies including manufacturing heavyweights like the US, and the Germans.

Anti import sentiment is missing.

Apart from Deepavali lights, there has been no talk of shunning any goods imported from China. Right from LED lights, to baby toys and mobile phones the Chinese imports have literally swept the Indian manufacturing sector market place. And the reason is easy that buyers want it cheap. And traders look towards liberally financed cheap Chinese goods to beat Indian products to the market place

Unfortunately Bapu is no more

It reminds one of cheap cloth imported from the looms of Manchester flooding the Indian market and replacing Indian cotton fabrics during the British rule. But now we have been independent for 70 years. Public sentiment has however not changed towards cheap imports. Unfortunately we do not have a Mahatma amongst us now to lead the nation against cheap imports. Surely a Man Ki Baat episode to counter the import mania we Indians continue to have, is overdue.

A short war could create an anti-China sentiment

A short border skirmish with an aggressive China in Dokolam could reverse that. It could stoke an anti China sentiment across the country. War is bad for both nations and should be avoided at all costs. However if it does happen, then the anti China sentiment could rise. If the Modi Government could capitalize on such sentiment in the event of a war. Perhaps it could stop rampant Chinese imports. That could offset some of the losses that a war could bring. It could be a silver lining to the dark war clouds and could push Indian manufacturing to win back its rightful pace in our domestic markets.

  1. No Comments.

Go to Top