Editorial     

Published: September 15, 2024
Updated: September 15, 2024

China checkmates ‘Make in India’!

Is ‘Make in India’ – the much-touted slogan of Prime Minister Narendra Modi — a hollow one? Or is Mr Modi’s vow to ban imports from China a joke? If the actual situation on the trade front with China is any indication, the ‘Make in India’ slogan has actually turned into ‘Make in China’ and ‘Dump in India’!

Incredibly, after Mr Modi vowed to ban imports from China, there has in fact been a tremendous spurt in imports from our giant neighbour. In fact, in fiscal 2024, China left behind the US, the UAE and the UK – our major trading partners — China has emerged as our largest trading partner with the two-way trade figure crossing the $ 100 billion mark to reach $ 118.4 billion, as against $ 70 billion in fiscal 2019. Instead of government policy boosting the Indian economy, we have been helping the Dragon speedily recover lost ground on the economic front.

Little wonder, Chinese economists have hailed their country’s bumper exports to India as contributing immensely in reviving the sagging Chinese economy. During the last 10 years, despite the Indian Prime Minister’s repeated pronouncements on banning the inflow of Chinese goods, the Dragon’s share of India’s imports has shot up from 29 per cent in fiscal 2013 to 30 per cent in fiscal 2024!

According to renowned economic think tank Global Trade Research Initiative (GTRI), from fiscal 2019 to fiscal 2024, India’s trade dynamics with its top 15 trading partners underwent significant transformations, impacting both exports and imports along with the status of trade surplus or deficit across various sectors. Surprisingly, much against the repeated utterances by the Indian Prime Minister on banning imports from China, the Dragon has now surpassed our three previous leading trading partners — the USA, the UAE and the UK.

According to GTRI, 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. Indian businessmen are lamenting that large-scale imports from China have adversely affected their business and balance sheets.

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 slogan?

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.

Unfortunately, instead of properly and effectively implementing the ‘mantra’ of Atmanirbhar Bharat we are increasing our dependency on China. The strategic implications of this dependency are ‘profound’ and impact not only India’s economic but also its national security, the GTRI study hints, suggesting a reassessment of India’s import strategies. “This is imperative not only to mitigate economic risks but also to bolster domestic industries and reduce dependency on single-country imports, especially from a geopolitical competitor like China,” the study says.

Moreover, imports from our giant neighbour so far were carried out by Indian firms. Now, with the entry of Chinese firms in the Indian market, our industrial product imports are set to rise at an accelerated pace. According to GTRI, as Chinese firms operating in India would (naturally) prefer sourcing most of their requirements from their parent firms, ‘Indian imports will rise sharply’. Whither then ‘Make in India’?!!