Boycott China vis-à-vis impact on Indian Economy

In the aftermath of recent clashes at Galwan Valley, there have been increasing tensions between the two nations leading to a growing clamor in the country to boycott Chinese products.

The rising chorus to boycott Chinese products or to halt trade with China has added a new dimension to the heated clash between the soldiers of both nations.

Now the question arises whether to boycott China or not?

Can we boycott China?

If yes, then at what cost?

What impact will it have on our economy?

Are we underestimating the consequence of an economic war with China?

Are we really Aatmanirbhar?

Is Trade halt a solution?

Several of these questions are hovering around the campaigns being promoted to boycott the products from China.
Across the country, people have been involved in burning Chinese goods and a Union Minister even wanting a ban on Chinese food. Social Media is playing a pivotal role in stoking these emotions but will shutting the door on Chinese products not have any detrimental effect on the Indian economy?

If we look from India’s point of view, China is India’s biggest trading partner after the US. China still accounts for around 10.5% of our trade and if Hong Kong included, it’s largest trading partner leaving US behind by a wide margin.

India's Imports by country (as on 2018)

As per 2018 data, China accounts for 5.08% of the total Indian exports whereas 14.63% of total imports. On the contrary, from China’s point of view, Indian exports are just 3.1% and imports are further low to ~1%. Looking at these figures, it's quite difficult for India to boycott China completely without suffering any loss from an economic point of view.

India's Exports by country (as on 2018)

Our government has been vocal to shun foreign goods and become self-sufficient enough. Concerning this, the government has come up with various initiatives as well.

But are we capable of becoming Aatmnirbhar?

Even the Chinese government mouthpiece Global Times stated about the ban of 59 Chinese apps that the ban may hurt the interests of some Chinese companies but India is in no position to cause harm to China’s juggernaut economy.

China is the world’s second-biggest economy and Asia’s largest. It is the manufacturing hub, many of the companies import parts from China due to low-price and wide range of availability. It can be considered as the world’s “factory”. It is a major trading partner for many of the countries, as a consequence boycotting China may not result in any significant adverse impact on its economy.

Losing on so many imports & exports is not the only detrimental impact. Added to this India could lose a lot of investments. It's quite evident to everyone how China has been increasingly investing in India. A lot many Chinese companies have been pumping billions of amounts into startups in India resulting in deeply embedding these giants into India’s socio-economic and the technological ecosystem.

Straining ties with China and boycotting its products is easier said than done as Chinese brands dominate the Indian market, be it smartphone dominance, bulk drugs import, tourism, etc. Turning a border clash into a boycott campaign will not resolve the matter. Already the Indian economy is set to contract for the ensuing fiscal year, amidst all this crisis boycotting China or a trade halt might worsen the situation from an economic point of view.

This dominance is so deeply rooted in the Indian markets, that even if we move to autarky, it’s going to take a lot of time to eradicate Chinese products from the Indian market.