Even as I had almost ended my three posts on China based on my recent visit, Baba Ramdev today stirred the hornets’ nest by urging India to boycott Chinese goods. I do not know if the statement of the Yoga Guru emanates from his falling business revenues and personal apprehensions about the future of his “Patanjali’ brand, which is severely stressed.
India’s exports to China in 2017-18 are about $ 17 Billion, and imports are $ 70 Billion but have overall managed to bring the trade deficit lower by $ 10 Billion. The Yoga guru may have thought that this could be the right time to take on the Chinese might, pressure from the US tariffs. He has missed out a few essential points, though.
Presuming that both countries have to source elsewhere, which could increase the cost of imports on an average 10%, it would cost China barely 0.9% of its GDP but cost India 2.9% of its GDP. That is a losing proposition for India!
Whether ‘Make in India’ would succeed if we switch over to producing or manufacturing all raw materials and intermediates? The answer is a definite no! I spoke to the then Secretary Science and Technology, Government of India as to why China could use our Iron ore with less Fe content. The secret was not technology but heavily subsidized Hydel power tariffs, around Rs.2.30 per Unit — India on an average charged over Rs.6/-.
Our strength is value addition, which has been proven by the Indian Pharma sector. Make them produce the raw materials, and the coast advantages vanish in a second. There are several hidden subsidies in China to ensure the survival of their industry, which includes prison inmates working and army assigned to factories as a part of the skill development process.
India is deficient in energy, rare earth, which China possesses. Indian businesses did not perform to global standards when the imports were restricted, often dishing out car relics like Ambassador and Standard 2000, long discarded at the countries of their original birth.
The Chinese are hungry for Indian culture, movies, which do not fail to rake up a few thousand crores each year. We must explore our strength in raw material resources, which can be converted into intermediates and value-added by India. That to my opinion, could be the only way forward, regardless of any border or political impediments. China also acknowledges India’s vast potential as a market and would do nothing to disturb it, particularly while under a sever trade turbulence with the US.
I would end stating that trade and culture are great levellers, in their ability to reduce tensions between two great civilisations and neighbours. We should promote it for the sake of prosperity of all.
Sampath Kumar
Intrépide Voix
