Indians boycotting Chinese goods is not as easy as it sounds


India and China are on the brink of a full-blown war, all due to a land dispute in the border of the two countries.

In the midst of the fight in the border, there are loud voices inside India to boycott Chinese products. The #BoycottChineseProducts hashtag has been trending big in India for over a week and has been gaining momentum as the days go by.

In fact, the Confederation of All India Traders (CAIT), a private trading association, on June 16 announced that hundreds of traders have vowed to support the trader’s body’s national movement to boycott Chinese goods and products and encourage Indian goods.

But, in reality, taking economic retaliation against China for its aggression along the border is easier said than done.

While the surge in domestic sentiments against Beijing may be fervent, Indian consumers and industries alike, over the years have been over-reliant on Chinese products and services.

Any policy change to tame the dragon by discouraging the consumption of its usually cheap products is fraught with the risk of raising costs for consumers, at least in the short term.

The Indian government however hasn’t officially hasn’t denounced Chinese goods. However, CAIT urged the government to take major steps such as withdrawing investment by Chinese companies into Indian startups and companies and canceling Chinese contracts to send a strong message.

This move might not technically sit well with many Indian home-grown firms such as Paytm, Flipkart, Zomato, and Swiggy, which have heavy Chinese investments. And for this exact reason, these companies have been facing the ire of social media users.

India is soaked with Chinese products. China makes up for about 45% of India’s electronics imports, one-third of its machinery, and almost two-fifths of organic chemical purchases. As much as 90% of certain mobile phone components, 65-70% of active pharmaceutical ingredients (for making finished drugs), and over a fourth of its automotive parts and fertilizers are imported from China, according to a CII note prepared in February to assess the Covid-19 impact.

The “Made in India” tag on the smartphone hides one very important fact: There is a very large proportion of China within the device. Import of mobile phone components (including printed circuit boards) during April-February FY20, according to government figures, hit $7.5 billion — of which 25%.

Therefore, Indians boycotting Chinese definitely cannot happen overnight. But with structural reforms and appropriate policy interventions in different areas, the Indian industry can build capacity, but that will be a longer-term proposition.

B Thiagarajan, MD of air-conditioning major Blue Star, told FE that China is the biggest component supplier. “Now, the Atmanirbhar initiative is taken by the government to enable even component makers to become self-reliant. But all these will take time.”

“When it comes to the global supply chain in the domain of electronics manufacturing, China is the one inseparable link. There is some component or process of virtually all products in which every electronic manufacturing country in the world is dependent on China. If India decides to stop imports from China, the production will be impacted,” George Paul, CEO, Manufacturers’ Association for Information Technology, said.

Whether Indians like it or not, they are unmindfully tangled with their Chinese counterparts, and now pulling apart will not be as easy as it is said. However, it is good to know how badly the dependency has grown. It is time for India to pace their self-reliant program, the Atmanirbhar initiative.

A number of Indian unicorns have lead Chinese investors. BigBasket has raised $1.1 billion from Alibaba group, T R Capital. BYJU’s has raised $1.4 billion from Tencent Holdings, Delhivery has raised $100 million from Steadview Capital and Tencent Holdings, Hike has raised $261 million from Ctrip, Flipkart has raised $7.7 billion from Steadview Capital and Tencent Holdings.

MakeMyTrip, a listed company has investments from Tencent Holdings and Foxconn, Ola has $3.8 billion in investments from Tencent Holdings, Steadview Capital, Eternal Yield International, Oyo has $3.2 billion capital from Didi Chuxing, China Lodging Group, PolicyBazaar has $496 million fom Steadview Capital, Quikr with $424 million from Steadview Capital, Snapdeal has $1.8 billion from Alibaba Group and FIH Mobile, Paytm has $2.22 billion from Alibaba group and SAIF Partners, Swiggy has $1.6 billion from Meituan Dianping, Hillhouse Capital, Tencent Holdings, SAIF partners and Zomato has $914 million from Alibaba Group, Shunwei Capital.

In reply to the border clash, PM Narendra Modi, gave a stern warning to China, saying that while India wished to maintain peace, it will not stay quiet if provoked. He added that the nation must be proud to know that its 20 Army martyrs who died in Galwan Valley, died fighting till the end. He also requested the attending CMs and Union ministers to maintain two minutes of silence for the slain warriors.