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What happens if India boycotts Chinese products

China is India's largest trade partner. But we import more than we export, which means if the trade was to stop, we will feel the pinch in the domestic market as the prices of previously imported products will rise. 

Written by: Arshi Aggarwal, New Delhi [ Published on: March 14, 2019 22:41 IST ]
Image Source : FILE

What happens if India boycotts Chinese products

Indians are furious at China. Beijing has once again blocked JeM chief Masood Azhar's listing as a global terrorist in the UN Security Council. This was the fourth time China derailed such a proposal in the last 10 years. And it has made Indians livid. 

Azhar's JeM was responsible for Pulwama terror attack, which claimed the lives of 40 CRPF personnel on February 14. Indians have taken to social media to demand a boycott of Chinese products to slam the nation for supporting terrorism. Hashtag #BoycottChineseProducts is trending on Twitter. While it is a show of unity in angst against China, but in practical terms, it may not be such a good idea to start a trade war with the neighbouring nation. 

Why? Because it will end hurting India more than China. 

China is India's largest trade partner. But we import more than we export, which means if the trade was to stop, we will feel the pinch in the domestic market as the prices of previously imported products will rise. 

From China, India imports capital goods, machinery, electrical, chemicals, and intermediate and consumer goods, while we mainly export raw materials. 

Impact of no imports from China: 

China's exports to India account for only 2 per cent of its total exports. So even if Indians boycott all the goods imported from China, it will not make as big an impact on China as to bring it to its knees before India. 

Pharma sector: India's pharmaceutical sector is critically dependent on Chinese imports used in drugs manufacturing. n 2018-19, China supplied over 80 per cent of the antibiotics imported by India. A trade ban between the two nations would affect the medicine market adversely. 

Telecom sector: India also imports over Rs 70,000 crore annually of electrical products, it would impact the prices of electrical gadgets and smartphones. Chinese companies such as Xiaomi, Oppo, Vivo and OnePlus nearly control 51 per cent of India's over $8 billion smartphone market. 

Power sector: India is critically dependent on China for renewable energy equipment. Between April 2016 and January 2017, solar equipment from China had a share of 87 per cent in a market pegged at $1.9 billion. The value of solar cells/photovoltaic cells whether assembled in module/panel, imported from China jumped to $3.41 billion in 2017-18 from $596.73 million in 2013-14, Power and New & Renewable Energy Minister RK Singh said in a written reply to the Lok Sabha last year.

Impact of no exports from India: 

Costlier Consumer goods: With raw materials being exported to China, the neighbouring country can manufacture and export its goods at such low prices owing to subsidies and support from the government. Boycotting Chinese goods would mean fewer cheap goods for consumers in India. A reduction in the imports of cheaper capital goods would also push up production costs, making products costlier, thereby, affecting the consumers.

Terror-supporting image: The hashtag #BoycottChineseProducts may not have a short-term impact on the country, but in the long-term it will affect the socio-economic image. The social media campaigns and trade embargos for supporting terrorist outfits on international platforms is likely to make other nations vary of excepting large investments or construction projects by China. 

Loss of export revenue: Apart from the above, there will be an obvious loss to Indian exporters if the trade was to stop between India and China. Even if in deficit, India exports good worth $13.3 billion to China.

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