Editorial     

Published: April 30, 2024
Updated: April 30, 2024

Wake up to Chinese import tsunami

What price ‘Make in India’? The much-touted policy of Prime Minister Narendra Modi, together with his vow to ban imports from China, has clearly not stemmed the Dragon’s ‘economic invasion’ of Indian markets. During the fiscal year just ended in March 2024, imports from China have crossed a whopping $ 101 billion, as compared to $ 70 billion in 2018-19. During the last ten years, despite the Prime Minister’s repeated pronouncements on banning the inflow of Chinese goods, our giant neighbour’s share of India’s industrial goods imports has shot up from 21 per cent in 2012-13 to 30 per cent in fiscal 2023-24

According to Global Trade Research Initiative(GTRI), an economic think tank, goods imported from China have risen 2.3 times faster than India’s total global imports over a period of 15 years. What is more, the think tank adds, China is the top supplier to India in eight major industrial sectors, including machinery, chemicals, pharmaceuticals and textiles, belying the general perception that Chinese imports are high only in the electronics sector.

Thanks to rising imports from China, India’s trade deficit with that country is growing very fast and the GTRI think tank considers this a cause for serious concern. Analysing India-China industrial trade between 2018-19 and 2023-24, its report notes that India’s exports to China have stagnated at around $ 16 billion annually while imports have surged, resulting in a cumulative trade deficit exceeding $ 387 billion over the last six years.

For its analysis, the GTRI think tank has defined industrial goods by excluding agricultural products, minerals, petroleum, and gems & jewellery. The industrial goods analysed through product-level import data in the study represent 98.5 per cent of India’s imports from China.

Surprisingly, India’s total merchandise imports stood at $ 677.2 billion in 2023- 24, of which over 15 per cent was sourced from China. Of this, $ 100 billion of imports was in major industrial product categories. Does this mean that the Prime Minister’s vow to ban imports from China was an empty one?

The GTRI report also highlights the significant reliance on imports from China across various sectors. Citing trends from the first 10 months of fiscal 2023-24, it notes that almost 42 per cent of India’s textiles and clothing imports and 40 per cent of its machinery imports in this period came from China. For the same period, the corresponding number was 38.4 per cent for electronics, telecom and electrical products.

Naturally, the question arises whether the much-touted ‘Make in India’ policy has made any dent on the country’s dependency on imports from China. Clearly, the time has come to review the country’s import strategies and take imaginative and effective steps to boost indigenous production. The strategic implications of the growing dependency on China are profound, adversely affecting not only the economy but also our national security.

Ergo, the need of the hour is not just patriotic slogans but effective measures to bolster industrial output across the board as well as diversify imports in order to reduce our over-dependence on a giant neighbour like China.