India-China border tensions: Call for ban on Chinese goods ignores economic realities and will hurt Indian companies

To stop drinking tea and eating momos – because Chinese soldiers have occupied a section of Indian territory in Ladakh – is surely not going to cause much distress to China. Nor will uninstalling TikTok and Zoom cause them to flee Galwan valley.

Samrat June 25, 2020 11:19:51 IST
India-China border tensions: Call for ban on Chinese goods ignores economic realities and will hurt Indian companies

Take your mobile phone. Turn it over. Read what’s written. Does it say Xiaomi, Oppo, Mi, Vivo, or OnePlus? Oops. You probably know by now that they’re Chinese companies. Boycotts, like charity, should start at home. If, like the people in Gujarat who tossed their made-in-China TV set from that very essential nationalist space, the balcony, you too, are keen on expressing your nationalist sentiment, you could start by smashing up your phone.

Next, have a look at your laptop. Lenovo? Apologies again, please feel free to fling it from the nearest balcony. Some other brand? Read the fine print. Does it say “Made in China”? Well, out it goes. Now repeat the process with all the electronics items in the house. Good luck with that.

If your phone has survived the first stage of screening, let’s look at the apps you have. Are you ordering in groceries using BigBasket? Sadly, that’s funded by Chinese venture capital. Ordering in food via Zomato or Swiggy? Both are funded by Chinese firms. Are you making payments using PayTM? Chinese VC funding again. Ordering in stuff on Snapdeal or Flipkart? Chinese money. Taking cabs using Ola? Educating your kids with a bit of help from Byju’s? Sigh. Do unto them what you did unto TikTok. And Zoom.

Apart from Chinese companies, a lot of Indian startups are funded by Chinese capital, making them part-Chinese. Moreover, there are also joint ventures in other sectors, such as road construction. For instance, a company named Essel Ahmedabad Godhra Toll Roads limited, which did the four-laning of the Ahmedabad-Godhra highway, has China Rail Construction Group as a part-owner. You might have to take some other road.

The situation gets tougher when we look at medicines. About 70 percent of the Active Pharmaceutical Ingredients from which allopathic medicines in India are made come from China. There’s a very good chance that you’d have to boycott any medicines you take, made by Indian companies, if you want to extend your boycott to components rather than finished products.

Boycotting everything Chinese is easier said than done.

The economies of the two countries have deep relationships and inter-dependencies built over years. That cannot be thrown from any balcony.

All these years our leaders from the Prime Minister down were busy courting China, inviting Chinese investments, and helping Indian companies enter the Chinese market. Now to suddenly turn around and become “atmanirbhar” will take a while.

The effect of attempting a total ban would perhaps be akin to what might ensue if Union Minister Ramdas Athavale’s suggestion to ban Chinese food in India is followed. To start with, there would be a difficulty in defining what is Chinese. Are momos and thukpa Chinese, now that Tibet is a part of China? Is tea, scientific name Camellia sinensis, Chinese?

To stop drinking tea and eating momos – because Chinese soldiers have occupied a section of Indian territory in Ladakh – is surely not going to cause much distress to China. Nor will uninstalling TikTok and Zoom cause them to flee Galwan valley. Extending the boycott to Indian companies with Chinese connections will harm the Indian companies and their workers the most, in a situation where the long lockdown due to the coronavirus pandemic has already flattened the Indian economy, caused severe job losses, and pushed the country’s GDP towards contraction.

Most Indians, though they may love their nationalist fulminations on TV and social media, promptly realise the futility of meaningless gestures when their wallets are involved. On Thursday, Bloomberg reported that “The OnePlus 8 Pro mobile phone, which is priced at a significant discount to Apple Inc.’s latest iPhones, was not available on Amamzon.com Inc.’s local website just a minute after it went on sale. At the same time, #BoycottChineseProducts was among the top Twitter trends in India for almost two days, after the nation’s army said at least 20 of its soldiers lost their lives in a violent standoff with Chinese troops in a contested Himalayan border."

BigBasket, Zomato, Ola, PayTM and the other “unicorns” with Chinese funding are also in no imminent danger of losing their customers to nationalist Twitter hashtags. They provide services that Indian citizens need and appreciate. They have thrived despite earlier calls for boycotts of Chinese products.

Similar noises about boycotts had been made in 2017 as well, after the Doklam standoff with China. The Rashtriya Swayamsevak Sangh, in its mouthpiece Organiser, had announced a nationwide drive against Chinese goods. China, with which India runs a huge trade deficit, was then India’s biggest trading partner. It has since been overtaken by the US.

The logic of shorter supply chains and localisation may have its merits for certain kinds of products, such as fresh food. Such logic does not apply to electronics components, or the pharmaceutical ingredients from which medicines are made. In order for Indian consumers to get inexpensive products — even ones made by Indian companies — those components and ingredients will have to be either made or sourced at competitive costs from somewhere.

It is in the interest of Indian companies and consumers, as well as the overall Indian economy, if the business decision on the best source for goods and raw materials is left to each company to make. The free workings of the market have proved beneficial to India since 1991. It would be a folly if those gains too, are lost in the rush to undo, in six years, 60 years of Indian history.

The writer is an author, journalist and former newspaper editor. He tweets as @mrsamratx

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