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Amid growing calls in the country to boycott made-in-China goods, FIEO is all for “a calibrated, well-thought-out strategy” on the issue, said FIEO President Sharad K Saraf.
According to industry representative, there are many items belonging to ‘essential imports‘ category which are critical for the production of several finished products that are exported worldwide, and thus there is a need to thoroughly analyse the pros and cons of any move and its possible repercussions.
“Given the Indian manufacturers’ huge dependence on Chinese imports, if China also takes retaliatory measures then the blow to Indian players will be far more damaging”, emphasised Saraf.
Ever since 20 Indian soldiers died and more than 70 were injured in a clash with Chinese troops in Ladakh’s Galwan area, there have been growing calls in the country to shun made-in-China goods.
The Department for Promotion of Industry and Internal Trade (DPIIT) has even asked online retailers to explicitly display the ‘country of origin’ label, on all products sold on their platforms. The government ecommerce marketplace GeM also now exhibits a ‘Make in India’ filter, to help buyers know the ‘country of origin’ of various goods on the platform.
“While we stand with the government, at present, we are all against a knee jerk, emotion-led reaction on the issue [of boycotting Chinese goods]. If that happens, there will be a cost to be borne by the Indian economy for which it might not be ready as yet”, said Ajay Sahai, Director-General, FIEO.
According to official estimates, China remains India’s top trading partner. It accounted for over 5% of India’s total exports in the financial year 2019-20 and more than 14% of imports. Currently, the two neighbouring nation’s balance of trade (BoT) is heavily tilted in favour of China.
“There is a need to work out on a well thought out strategy. One thing that we can do is to keep a check on the exports of our raw material to China, using which China is competing with us in many markets,” Saraf suggested, adding there could be a cess on Indian exports of raw material such as cotton, spices, plastics and chemicals to China.
China is the third-largest export market for Indian goods as of FY19-20. Sahai added that 50-60 percent of Indian exports go to China in the form of raw material.
In many Indian sectors such as electronics, chemicals and pharmaceuticals, manufacturers are hugely dependent on key imports from the neighbouring nation, which is also the world’s second-largest economy. For example, a significant share of inputs required in electronics components manufacturing has traditionally been sourced from China. For many electronics manufacturers, it has always been financially viable to import the SKD (Semi Knocked Down) or CKD (Completely Knocked Down) equipment from China.
With China in the backdrop, the apex body of exporters, while playing an active role in the government’s self-reliant India mission'(Aatma Nibhar Bharat Scheme), has asked its members to explore countries having high anti-China sentiments. These include countries such as the US, EU, Japan, South Korea, Australia, New Zealand, Canada, among others.