Amid an exponential rise in Covid-19 cases and Chinese aggression in Ladakh along the disputed Line of Actual Control, a number of Indians have started campaigns like #BoycottChina or #BoycottChineseProducts on social media to encourage #AtmanirbharBharat (Self-Reliant India), hurt China’s global economic influence, and teach thy neighbour a lesson.
In a viral video, Sonam Wangchuk, an Indian innovator and education reformist, asked fellow Indians to boycott ‘Made in China’ products and apps in response to the Chinese incursion. In the hard-hitting video, he said: “Give up all Chinese software in a week, all Chinese hardware in a year. Use your wallet power. #BoycottMadeInChina #SoftwareInAWeekHardwareInAYear to stop Chinese bullying in Ladakh and eventually to liberate the 1.4 billion bonded labourers in China, as also the 10 million Uighur Muslims and 6 million Tibetan Buddhists.
“On one hand, our soldiers are fighting them and on the other hand, we buy Chinese hardware and use software like the TikTok app, we give them business worth crores so they can arm their soldiers to fight against us. What is your responsibility as a citizen, in this India-China border tension? I am getting rid of my phone, which is made in China, within one week and in one year, anything that is made in china, I will throw out of my life.”
Even if the call to boycott Chinese products and services is voluntary, it is utterly impractical, extremely emotional, completely uneconomical, and deeply affects India’s national interest.
Is it feasible for India?
India is the biggest importer of Chinese consumer goods. From consumer durables such as electronic products and mobile phones to plastic items and industrial goods, from vehicles and solar cells to toys and essential pharmaceutical products (including tuberculosis and leprosy drugs, and antibiotics), the range of goods India imports from China is massive.
In 2018-2019, India’s trade with China was more than $87 billion.
While Indian import from China was approximately $70 billion, Indian export to China was just $17 billion. This means India carries a trade deficit of $53 billion with the Red Dragon and the country can’t wipe away this deficit overnight. Livemint reports: “Sure, India is a large market for Chinese goods, accounting for 3% of China’s exports and adding up to $75 billion in 2019. But here’s the thing: India’s $17 billion in exports to China account for a much higher 5.3% of our total exports. Any trade war with China would hurt India, too.”
Consider this: India exports 36% of its diamonds to China. The cancellation of four major trade events between February and April due to Covid-19 is expected to cause a loss of over $1 million in business opportunities in the jewellery sector for Jaipur alone. The domestic fisheries sector is anticipated to incur a loss of more than $171,000 due to the fall in exports to China because of coronavirus restrictions.
A boycott of Chinese products would not work to India’s advantage given the extent to which China has become central to India’s supply chain for products and services. A full-scale boycott is unrealistic (many products have Chinese inputs that don’t come with a ‘Made in China’ label) and comes with a high financial cost (non-Chinese alternatives are expensive).
The fallacy of #BoycottChineseProducts
In 2018, Baba Ramdev’s Patanjali Ayurved Limited, which till 2017 was campaigning for the boycott of Chinese products, signed an MoU (Memorandum of Understanding) with a Chinese firm to promote ‘Ayurveda research and science’. Under the MoU, said Acharya Balkrishna, CEO and MD of Patanjali, the Government of China would provide required resources and assistance to India in the field of art, culture, tradition, yoga, research for Ayurveda, herbal medicines, yoga centres, tourism, IT sector, education, and media.
18 of the 30 Indian start-ups worth over $1 billion have Chinese investors on board.
A few Indian apps such as Big Basket, Flipkart, Make My Trip, Ola, Oyo, Paytm, Policy Bazaar, Quikr, Snapdeal, Swiggy, Zomato, Dailyhunt, Gaana, Practo, and Khatabook are a huge success because of financial backing from China. BYJU’S, India’s leading education and learning app and the world’s most valued edtech company at $5.4 billion, is backed by Tencent Holdings, (a Chinese Internet services giant who has invested over $300 million in the success of Flipkart). BYJU’S is the official sponsor of the Indian cricket team. The Alibaba Group has poured in over $400 million in Paytm and over $250 million in Big Basket. Ola received funding from a number of Chinese companies including Tencent Holdings (with an investment of more than $500 million in the ridesharing company). Over $500 million for food sharing app Swiggy‘s initial growth came from Chinese companies. The outer façade of the Statue of Unity, the world’s tallest statue located in the state of Gujarat, is made up of 1700 tonnes of bronze plates and 1850 tonnes of bronze cladding – cast by Jiangxi Tongqing Metal Handicrafts Co. Ltd in China.
Watch: Why India can’t boycott China?
Meanwhile, share of Chinese products in the INR200,000 crore Indian smartphone market is 72%; 45% in the INR25,000 crore smart television market; 26% in the $57 billion auto component market; 90% in solar power; and 60% in the pharmaceutical market.
The right way to become self-reliant
As per the World Trade Organisation rules, India cannot impose a full ban on imports from China even if it does not have any diplomatic, regional, or trade relations with it. Anupam Manur, a Policy Analyst at the Takshashila Institution, observes: “If India were to try and make all the products that we currently import from China at home, it would involve a considerable reallocation of our resources from productive to unproductive uses. Immediately, the range of products available as a choice to the consumer would diminish, the quality of the products would be worse and the prices would be higher. The welfare gains from trade would be wiped out and the cost of all the products would become considerably higher and the retailer and the consumer who relied on cheaper imports would suffer.”
If Chinese products are boycotted, it can increase the inflation rate in India because Indian products are comparatively expensive. PM Narendra Modi’s #AtmanirbharBharat campaign for a self-reliant India aims to reduce dependence on ‘Made in China’ goods and services. But unless a majority of Indians voluntarily pay more to inflict economic pain on China, #BoycottChina will not achieve its objective. Livemint notes: “Large Indian companies like Dr. Reddy’s Laboratories, Mahindra & Mahindra and Sundram Fasteners have manufacturing units in China that cater to markets abroad as well as in India. In several segments, the fate of an entire industry could be in jeopardy if its China links are severed… India has border disputes as well as other issues with several countries. Shunning their products or services is not an answer.”
The US continues to give monetary support to Pakistan despite the latter’s reluctance to curb terrorism on its soil. Can India sever trade ties with the US? Most middle Eastern economies fund Pakistan’s terrorism directly or indirectly. Can India stop oil imports from these countries?
Can India boycott Chinese products? Will it make ‘Made in India’ products flourish? It’s an individual choice – it will neither make India self-reliant nor crush China’s economy.
If at all, it will make people not boycotting Chinese products anti-nationals. Manur adds: “Even if we wanted to, it is nearly impossible to keep China out of our daily lives. There’s a little bit of China in every product we consume. Ironically, the laptops and mobile phones that we use to forward the message to boycott Chinese goods are made in China itself. The modern-day production process is complex and interconnected. Every good that we use has different components from various countries.
“Take the mobile phones: it will have some rare earth elements from China, uses the labour and land from China, has investment and capital from the US or a European country, has entrepreneurship from Japan or Korea, and it finally, might use software made in India. Thus, it is impossible to isolate any country and boycott its products.”
So how do you hurt China? Although India does not have a comparative advantage in producing the products it imports from China, an economically sustainable approach would be to promote local manufacturing. Finshots writes: “The Indian government set aside ₹50,000 crores, to incentivize local and global electronic manufacturers to Make in India. They also set aside another ₹10,000 crores to incentivize manufacturers to source and produce raw materials for pharmaceutical drugs. This is how you reduce dependencies with China. Not boycotts.”