If India’s diplomatic objective is to economically punish the Chinese for their support to Pakistan, then it is being done in a deeply flawed and ham-handed manner.
At a time when the economy is struggling to revive and the demand for consumer goods is stagnant, the Sangh Parivar’s concerted call for the boycott of Chinese goods is bound to further hurt India’s economy. The Confederation of All India Traders (CAIT) says the call for the boycott of Chinese goods could reduce Diwali sales by up to 30% compared to last year. Traders across the big wholesale markets in Delhi confirm that there is a drop in the demand for Chinese items. The secretary general of CAIT Praveen Khandelwal rightly says Chinese manufacturers will not be hurt because Indian traders had built up stocks for the Diwali sales many months ago. It is the local traders and the chain of small retailers downstream who will suffer loss of incomes. There are thousands of young men and women who sell a variety of cheap Chinese items to commuters at traffic lights and they too will suffer loss of incomes by the Sangh Parivar’s boycott call. These are the self-employed whom Prime Minister Narendra Modi wants to empower with institutions like the Mudra Bank. But the PM is totally silent on the whole issue. The BJP-dominated Confederation of All India Traders has supported the boycott call but has also sought compensation from the government for the losses which small retailers will suffer. The logic here appears to be that you first first inflict damage, and then seek damages for small traders!
Is there a method in this madness? This campaign is not just linked to Diwali sales. This push had started as early as April when China refused to support India’s case for declaring Jaish-e-Mohammed Chief Masood Azhar, a UN-designated terrorist. Later, the campaign against Chinese goods gathered further momentum when China insisted on established procedures to be in place before admitting India at the Nuclear Supply Group(NSG). Modi has staked his personal reputation on this as he met several world leaders seeking their support to let India into the NSG. The NDA government publicly accused China of blocking India’s entry.
After these episodes there was obvious dissonance in the bilateral relations between India and China. Around this time, the broader Sangh Parivar began upping the campaign against Chinese goods. An important Parivar mascot, Baba Ramdev, who is a Cabinet rank advisor to the Haryana government, began demanding the boycott of Chinese goods on the ground that China was earning a huge trade surplus from India and in turn harming our interest in various ways, including by supporting Pakistan. Haryana health minister Anil Vij was more specific in suggesting that China was using its earnings from India to arm Pakistan. He too was very vocal in seeking a ban on Chinese goods. It is lost on the BJP that Ramdev is himself a businessman, running a Rs.5000 crore empire, and it may not be appropriate for him to campaign against Chinese goods while being an adviser to the BJP government in Haryana. Besides, wasn’t Haryana rolling the red carpet for China to invest billions of dollars worth of infrastructure for an industrial township in Sonepat? No wonder, the head of Niti Aayog , Arvind Panagariya, recently urged that the boycott of Chinese goods should not affect the massive infrastructure investments proposed by the Chinese in townships and railways which Xi Jinping had specifically mentioned at the BRICS meeting in Goa.
If India’s diplomatic objective is to economically punish the Chinese for their support to Pakistan, then it is being done in a very ham-handed manner. Boycotting Chinese products will first increase the costs for the millions of Indian traders who thrive on selling these products which have costlier Indian substitutes. It will also raise the costs for the consumer whose real incomes may fall. The penetration of Chinese products is too deep to be played around with in such a cavalier fashion.
Mercifully, commerce minister Nirmala Sitharaman brought some sanity to the debate last fortnight by saying “a complete ban on Chinese products demanded by sections of Indians is not feasible”. She suggested that international trade is governed by rules and trade barriers can be imposed only as per rules. Note the commerce minister’s reference to Sangh Parivar zealots as “sections of Indians”. However, her statement came after much damage was already done and traders in big markets were reporting reduced demand for Chinese products.
Ironically, the boycott call is mostly impacting lower-end consumer products which relatively poorer people consume. Higher-end products — which are sold on online platforms such as Flipkart, Snapdeal and Amazon — have not been affected by the boycott call. In the first week of October alone these online platforms sold half a million Xiaomi smartphones, which are made in China. There is also a proposal to manufacture Xiaomi phones in big numbers in different locations in India by Foxconn. But the way current bilateral relations are being conducted, one doubts whether they will fully fructify anytime soon. A Chinese business representative told this writer the mood in the top echelons of the government in China is , “it is better to wait and see if the Modi government gets a second term and then decide on the big ticket investments in infrastructure”. The clear implication is the atmosphere currently is not conducive as the temperature vis-à-vis Pakistan and therefore China is getting raised to a new pitch. It may take some time for sanity to return and by then the general elections will be near in India. Like many Sangh Parivar projects, the BJP has not been able to calibrate the campaign against Chinese products.
Diplomatically, it is like tilting at windmills and the Modi government has overplayed its card of “imposing costs on China”. The PM realised the limits of this strategy at the BRICS summit in Goa this month. Both the Chinese and Russians, who have a big leverage in the evolving geo-economics and politics of the larger Eurasian region, want to do business with Pakistan for their own specific needs. There is a transactional aspect to these engagements. India cannot afford to be petulant about it and resort to knee-jerk responses like calling for a boycott of Chinese products. In any event,it is most ill-advised to generate xenophobia in domestic politics by making China a whipping boy. It does not serve our national interest to do so.