India, China And Everything In Between

Author: Rohith C R

China has been in the news for a prolonged time:

From the South-China sea conflicts to the trade wars with the US and the Wuhan coronavirus breakout, the latest addition to the list being the Standoff between Indian and Chinese troops at Galwan Valley of Ladakh. A brutal and unpropitious development is the casualties of twenty Indian Army personnel.

Ever since the cowardly move by the neighbour, Boycott China sentiments across our country have gained momentum. Be it visuals of people destroying Chinese electronic gadgets or certain importers eying elsewhere. Though it is unifying all of us as Indians, it should be given a thorough evaluation as to how and what extent can we make an impact on China.

Following are the few things to look out for.

1. Boycotting China is not going to hurt China.

India imports seven times as much as what China imports from us. India is China's 11th largest export destination at a value of about 68.06 billion USD. On the other hand, China is the largest trading partner of India with a negative trade balance of 51.72 billion USD. It would not make any daunting impact on them even if we were to stop all of the imports; Instead, there shall be a void created here due to non-availability of alternatives and an increase in the retail price of various commodities.

Deep-Global chain of Chinese commodities- If Indians were to pledge to not letting China profit from the Indian purchasing power, they shall also have to refrain themselves from buying all products which use Chinese goods and labour.

For example, a product, though manufactured in Europe, might use raw materials sourced from China and our very own Namma Metro construction uses the Tunnel Boring Machine from a Chinese Based firm.

Largely China dependent domestic Industries- Several businesses in India import intermediate goods and raw materials, which in turn are processed into final goods. Such goods include electronic components/machinery, fertilizers, medical equipment, API (Active Pharmaceutical Ingredient). For example, though India is termed as the 'Pharmacy of the World', about 68% of API, also called as a bulk drug, which is the raw material to manufacture drugs, is sourced from China.

2. Making India a manufacturing hub.

In just about five decades, GDP of China grew from 92.60 billion USD in 1970 to 14.30 trillion USD in 2020, becoming the manufacturing hub of the world.Being a democratic country, young demographic dividend, large domestic market and having a large source of manpower, India can be a better alternative to China. Focus can be on labour-intensive industries which require a lot of low skilled workers and later upskilling can be done.

The government must focus on creating a thrive-able environment for investments. Sure India ranks 63rd in ease of doing business but stands 136th in ease of starting a business. Major hurdles in this being: long judicial process in arising disputes, redundancy in policymaking occurring when governments in central and state changes. India faces skillset issues. Most of the FDI is about service sectors and many of these sectors are those where India does not need any drastic upskilling, for instance, IT. But we don't have similar skills in manufacturing. To resolve this a good infrastructure must be in place along with good policies which enables the investors to make profits. Note that foreign investors are not here to develop India but this is something that will happen in the process. These are some of the challenges to be addressed.

History has always proved that necessity is the greatest motivator. Had it not for the world wars to have taken place, there would not have been such accelerated development in a lot of domains like Automobiles, radio, marine and aerial warfare to name a few. If not for the cold war, the US would probably not have flexed its muscles to put a man on the moon: A feat achieved just after about six decades since the first manned-flight.

India has come a long way and there is a long way left to be traversed.

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