Is this possible for India to ban Chinese products?

The recent outrage at the border has worsened India China bilateral relations and Indians are protesting across the country to boycott the Chinese products. But is it possible for India to boycott the Chinese products completely, is the question in everyone’s mind.

 

China is India’s second-largest trading partner after the US. And it accounts for nearly 12% of India’s imports across sectors such as chemicals, automotive components, consumer electronics, and pharmaceuticals. 

India’s smartphone sector heavily depends on the Chinese market having products like Xiaomi, Oppo, etc. Chinese toys in India are very cheap in comparison to Indian toys.

Indians are using the Chinese applications like Tik Tok, Zoom, Helo, UC browser, Shareit, Cam Scanner in abundance are totally dependent on it.

Chinese money funds many Indian startups like Zomato, Paytm, Big Basket, and Ola. It has embedded itself deeper into the Indian ecosystem and it's hard to disintegrate from them at this point in time when the country is already dealing with the pandemic.

According to the World Trade Organisation rules, it is not possible for a country to impose a full ban on imports from any other country even if there are no diplomatic, regional, and trade relations with that country. But the government of India can ban some Chinese products on the basis of health and security issues.

India can though impose anti-dumping and countervailing duty on the cheap Chinese products. After these duties are imposed, the prices of Chinese products like electronic items and toys will automatically increase and hence the demand will decrease.

Indian manufacturers can take advantage of the same and can utilize this chance to produce products in India. This will boost governments “Make in India” campaign thereby generating employment for people.

Impacts of the ban on Chinese products in India

• Inflation: Since the Indian market is a price-sensitive market and the boycott of Chinese products will definitely lead to Indian customers buying expensive toys and electronic items instead of cheap Chinese products, Inflation is likely to rise.

The Lower income group people can suffer a lot as they would not be able to buy the expensive items

• Impact on Trade: 15.3 % of India’s imports are from China and 5.1% of India’s exports go to China according to UNCTAD (United Nations Conference on Trade and Development )in 2018. So it is going to be a loss for India if the boycott happens as its impact on China would be minimal as it has good trade relations with almost all the countries in the world

• Impact on Investment: The Chinese companies are investing in many companies in India having Huawei and Xiaomi among them. This investment has increased when compared to previous years

Indian Government should think rationally on this matter before making any formal judgments as we are already fighting a war with the pandemic and at this point in time any such trade war can worsen the situation of the country