No country in the world today is self-sufficient. Every country is dependent on some other country for trade. By trade I mean Import and Export. This brings me to the topic that has been in much debate of late.
Can India boycott imports from China?
The answer to these question you will find out at the end of this blog. We will be looking at 10 facts and figures that will show India’s dependence on China. Let’s start..
(i) Trade Deficit
Total import export figures between India and China in 2019:
The total trade between India and China amounted to rupees 6 lakh crores. In this India’s exports to China was about rupees 1.1 lakh crores, whereas India’s imports from China amounted to rupees 4.9 lakh crores. A huge difference. Thus India’s trade deficit with China was rupees 3.8 lakh crores in 2019.
These figures indicate a huge trade deficit with China and this also happens to be India’s largest trade deficit with the single country. The straight figures are completely in the favour of China at the moment. In fact, the figure of imports from China have been increasing for the past decade. In 2010, imports from China were rupees 1.4 lakh crores. So between 2010 and 2019 Imports grew by to 250%.
Indian Pharmaceutical companies import around 70% of their total bulk drugs known as (API). API stands for active pharmaceutical ingredients. The API’s are the key raw materials used for manufacturing medicines. For instance, Paracetamol is the API for crocin. Of the 373 drugs listed under India’s national essential medicines list, some 200 are imported as API is mostly from China.
In 2019, Of the total 3.6 billion dollar Imports of APIs, China share was 2.4 billion dollars. See your we realized, the kind of dependence that we have on China for APIs. Are we doing anything about it? Yes, In Feb 2020, in a meeting chaired by NITI AAYOG, The government asked top Indian Pharma firms to increase their production of raw materials in a bit to end the country’s dependence on Chinese Imports for them.
Smartphones are the most essential productive of our day-to-day use. Earlier this year, India surpassed US to become the second largest smartphone market in the world with a growth of 7% in 2019. But when it comes to players operating in India, The top 5 Smartphones sold in India are foreign brands. That means no indian players in the top five. Out of the tops five, 4 are Chinese Brands, Namely XIAOMI, VIVO, OPPO and REAL ME. Together, Chinese smartphone brands have captured a 73% market share in 2019 compared to 60% in 2018. The leader is Xiaomi with 30%. The next up is Vivo with 17% and the third place is taken by Samsung at 16%.
And now you must be wondering what about Indian players in the smartphone segment. They do exists. They are known as the milk brand, MICROMAX, INTEX, LAVA and KARBONN. These companies have a convincingly offline Market, but it fades in comparison to the Investments made by Vivo, Oppo and Xiaomi.
The share of Chinese products in the Indian television market is about 42-45% in the Smart TV segment and 7-9% in the Non Smart TV segment. While Samsung lead the overall TV segment. Xiaomi was the leader in the smart TV segment with the 40% growth in 2019. With smartphone makers aggressively entering the smart TV segment, the one’s undisputed leaders of the Indian television market such as Samsung and LG are facing fierce competition from chinese brands such as Xiaomi, TCL and One Plus.
(v) Solar Power
Chinese products have an 80% share in India’s 38000 Megawatt(MW) solar power market. India imported solar cells and modules worth 1.1 billion dollars from China in the first nine months between April and December 2019.
(vi) Toy Market
In 2019 India imported toys worth 2127 crores. Almost 90% of that was imported from China. And since electronic components are also imported from China, Indian manufacturers of battery operated toys or toys containing battery-operated parts or also dependent on China.
(vii) Bicycle Market
India’s bicycle imports from China stood at about rupees 1600 crores in 2019. 50% of the demand in the country’s bicycle Market is met by Imports of which China has a large share. The import is happening despite the fact that there’s a 30% basic custom duty on bicycle and 20% on bicycle components. China is also exporting bicycle and its components to Sri Lanka and Bangladesh, as no import duty is there for these two countries. Quite smart move by China. And now after looking at India’s import dependence on China, let’s look at how some of these sectors in India export products to China.
(viii) Seafood Imports
Recently, China emerges as an important buyer of Indian Seafood, particularly the SHRIMP. According to the Marine Products Export Development Authority, India Seafood export to China reach 1 billion dollar in 2019. In the same period previous year it was around 700 million dollars registering a growth of about 42%.
(ix) Diamond Export
China purchases nearly 40% of India’s cut and Polished diamonds directly and indirectly. The next significant market for Indian diamonds is US with 35% share.
(x) Investments from Chinese firms in Indian startups
China is one of the most active investors in Indian startup companies. In 2019, Chinese firms invested rupees 29000 crore in Indian startups. The growth was almost about 94% as the investment in 2018 was rupees 15000 crores. Out of the 30 unicorn startups in India, Almost 18 startups have received Chinese investment. These investments in India come from many Chinese companies. But the two dominant ones are Alibaba group and TENCENT holding.
Let’s see where they have invested. The Ali Baba group alone has strategic investments in Big Basket, Paytm, Zomato and Snapdeal. Tencent holding on the other hand has invested in Indian firms like Byju’s, DREAM11, Flipkart, Hike, OLA, Swiggy, Policy Bazaar and MX Player.
Now the point to note here is that these Chinese firms are not the sole owner of these platforms. Many Indian as well as non Chinese investors also hold majority control on most of these companies, making it difficult to classify them as Chinese or Non-Chinese.
Now I think by now you realize the kind of dominance China has of the Indian market whether we can boycott imports from China completely?
It all depends on the kind of investment, time, dedication, resources that is spent by the private and the public sector in India. So if we boycott imports from China, Are we going to create any dent in the Chinese economy? I’ll leave you with this final numbers. In 2019, China’s total export stood at 2.5 trillion dollars globally. Out of this, China’s export to India stood at roughly 74 billion dollars with accounts for only 2.5% of China’s total exports globally.
Read more What is Group Discussion?
So these figures tell us how less dependent China is on the Indian economy whereas India is more dependent on China. Now, what do you think about the same. Please let us know in 2-3 sentences below in the comments section. You can also let us know what kind of topics should we cover in future post till then,
Keep learning and Get set to ACE Group Discussion