Made-in-China equipment are so deeply entrenched into Indian products that any break-up in trade will hurt India more than China
Following the power play in Galwan valley of Ladakh there is a growing sentiment to boycott Chinese exports to India. But this seems to be easily said than done. China accounts for about 14 per cent of India’s imports and is a major supplier for sectors like mobiles, telecom, power, plastic toys and critical pharma ingredients. During April 2019-February 2020, India imported goods worth $62.4 billion, while exports to the dragon nation stood at $15.5 billion.
China is India’s largest source of imports. In 2018-’19, India imported goods worth $88 billion from China (including Hong Kong). This was more than 17% of India’s total imports, and is more than double of what India imports from the United States, which is at the second place with goods worth $36 billion. India, on the other hand, only exports around $30 billion worth of goods to China (2018-’19).
What worsens this balance of power is the type of goods India exports to China versus what is imported. “We export mostly raw material and low value items to China, but we import value added items,” explained Rakesh Mohan Joshi, Chairperson of the Indian Institute of Foreign Trade. To get a hint of how deep Chinese equipment are entrenched into Indian system, a report by Brookings estimates that three in four power plants in India use Chinese equipment.
Where China’s grip is most visible to the average Indian is in its dominance in consumer goods. The Indian smartphone market, for example, is completely dominated by China. Four out of five top smartphone sellers – Xiamoi, Oppo, Vivo and Realme – in India are Chinese. Ultimately it turns out that three out of every four phones sold in India in Q1, 2020 were made in China.
The situation in the Smart TV market is no different, where Xiamo is the leader in Indian market, commanding a massive 27% share. This domination extends across industries, as China dominates rural consumer purchases too. As much as 45% of diammonium phosphate fertiliser and 13% of urea is imported from China. Any effort to boycott China in this sphere will drill a hole into the pocket of the Indian farmer.
Crisil in its research clearly highlights that any disruption in trade with China will severely hamper supply chains for Indian manufacturers. As much as 67% of electronic components are imported from China. This means that even if one were to buy an Indian electronics item, a large amount of the item’s value would still find its way back to China.
Bulk drugs is one sector highly dependent on China with as much as 69% imported from the country, specifies CRISIL. Of specific concern is antibiotics, where dependency is as high as 90%. “If China decides to pull the plug on supply [of antibiotic], it will lead to a huge public health crisis in India,” explained Sandeep Narula, Associate Professor & Assistant Dean, School of Pharmaceutical Management, IIHMR University, Jaipur.
