Modi government has repeatedly claimed that India will “self-reliance”, and for this reason it has repeatedly “smashed Chinese companies” this year. However, data show that India’s import trade of Chinese goods has become more prosperous.
Some Indian companies have to admit their dependence on Chinese products because the quality of Indian products is not good. Under the dual pressure of the Coronavirus and India’s absence from RCEP, the lives of small-scale Indian companies may be even more difficult.
Indian companies are highly dependent on Chinese imports: because of good quality
According to Hong Kong’s South China Morning Post on November 22, Indian Prime Minister Narendra Modi’s efforts to make the country “self-reliant” seem to be progressing. Since the launch of this “movement” in May, India’s import trade from China has actually increased.
In particular, it is generally believed that Modi’s move was originally intended to limit India’s dependence on China.
According to the report, not only is China still India’s largest trading partner and source of imports, but according to the latest government data, China’s share of India’s total imports has increased from that of the previous fiscal year in the past six months to September. 13.7% rose to 18.3%.
This is largely related to the nature of Indian imports, more than half of which are used to produce finished products. People also realize that it may be easy to shout out slogans such as “Speak for the locals” promoted by Modi, but it is much more difficult to implement.
It is worth noting that, from banning hundreds of applications to restricting Chinese investment, India has issued a series of policies this year to curb China’s economic influence in the region. But the report pointed out that for many Indian businessmen like 31-year-old Sameer Thadani, reducing their dependence on Chinese imports is even more difficult.
Tadani’s company will import locks, chains and buckles and other accessories from China, which are then used to produce high-end luxury bags and eventually exported to Europe. And if he switches to substitute products made in India, he is worried that customers will “leave me.”
“The quality of Indian accessories is not as good as that of China. Once the accessories look worn out, the appearance of the entire bag is ruined. If the brand logo on the bag is scratched, would you still use it?”
Saurebh Potnis, 35, found himself in a similar predicament. His company mainly produces and exports foot wash basins. Since April, he has been looking for a domestic valve in India to replace Chinese imports.
“But there is no product that can match the quality of valves made in China. Therefore, we now supply both lower-priced hand wash basins that use Indian valves, and products that use high-quality Chinese valves at higher prices.”
Self-reliance seems to be “more and more beyond the reach of New Delhi”
Although India’s imports of Chinese goods in certain areas have declined this year, this seems to be more related to the Coronavirus rather than government policies.
Santosh Kamble’s company can produce 3 million bags a year. He said that his industry has been dominated by Chinese manufacturers in the past.
“All major brands love to import ready-made bags from China, and the materials imported by other local brands from China also account for 60% of the raw materials they need. Now this import amount has dropped to near zero, but this It’s just that the industry has been hit hard by the pandemic.”
As the chairman of a local industry and commerce federation, Kemble predicted that “once the pandemic improves,” Chinese commodity imports will rebound rapidly.
He also helped Modi find a way to urge the Indian government to take full advantage of the current trade disruption and adjust the global supply chain, saying that “India needs to seize this opportunity.”
However, the South China Morning Post believes that the resources needed to realize this painstaking effort seem to be increasingly beyond the reach of New Delhi.
The Reserve Bank of India announced last week that the country has entered a technical recession “for the first time in history”, and the economy has shrunk for the second consecutive quarter. Official data show that from April to June this year, Asia’s third-largest economy contracted by 24%.
Modi recently claimed that India’s economy is recovering and will achieve the government’s goal of $5 trillion by 2024. However, India’s GDP is currently about US$2.8 trillion. Economic forecasters from the Oxford Economics Institute just proposed on the 19th that India’s economic growth rate will continue to hover around 4.5% before 2025.
At the same time, last Sunday, 15 countries including China, South Korea, Japan and Australia signed the Regional Comprehensive Economic Partnership Agreement (RCEP), which accounts for about one-third of global GDP, without India’s participation.
The next day, Indian Foreign Minister S Jaishankar stated that India is determined to switch to a “self-reliant India” policy to “consolidate comprehensive national strength”. Despite repeated attempts by reporters to contact, officials of the Indian Ministry of Commerce did not comment.
As a result of this, the crisis faced by Indian traders and manufacturers has deepened. One of them told the South China Morning Post anonymously that the most affected are the smallest companies in India.
He said: “The government asks us not to fire employees, but it provides us with little relief or stimulus policies. When we need substantial assistance, what we get is loan deferred payment.”
Although the Modi government has repeatedly announced the provision of simple, low-cost loans to entities, the huge pressure on the country’s banking industry means that there is virtually no financial relief.
A company in Mumbai mainly produces customized equipment for the hospital sector. The boss said that although he keeps receiving orders from public and private institutions, they all say that payment cannot be made until a few months after delivery.
“This means that I have to pay for the purchase of materials and production. But the bank refuses to lend, and the customer refuses to give me large advance payments. Even with customers, machinery and expertise, the business still cannot run. This is the case. How long can it last?”
Not many people believe that self-reliance can be achieved only by slogans. For some Indian traders such as Tadani, this is not a new concept.
Twenty years ago, his family tried to build a factory to produce high-quality parts imported from China.
“We have machines and even cooperate with the Chinese, so that we can help us manage the factory.” But because the government did not issue the required licenses and certificates, the project came to a halt at the last minute.
At the end of the article, the family suffered a huge loss and continued to rely on Chinese imports like everyone else.