India is well poised to handle the economic pressures arising from its strained relationship with its populous neighbor China. Experts said that while reduced economic dependence would impact India’s economy in the short term, the exercise will bear fruits in the future.
Even as India’s imports from the dragon nation have been slowing down in the last couple of years, the recent military aggression by the dragon nation in the Galwan Valley has just underlined the need to re-charter a new China policy.
“Given the recent transgression by China, India has been forced to react both politically and economically. India's dependence on China must reduce, particularly for essentials,” Nirupama Soudararajan, senior fellow & head of research, Pahle India Foundation, told IN. China has been known to weaponize their investments, she added.
“Rethinking Chinese investments in India may affect India negatively in the short run, but India has been known to rise to the occasion during difficult situations as this, such as post-Pokhran US sanctions,” she said. “The positive impact of our self-imposed sanctions will only be felt if we persevere.”
India must deal with indirect imports from China too, Soudararajan said. Several cheap products from China could find their way into India through other Asian countries.
Imports from China has come down from $76.4 billion in 2017-18 to $65.3 billion in 2019-20. In 2018-19, the major fall was seen in electrical and electronics products, imports of which declined by nearly $8 billion. In 2019-20 imports of electrical and electronics further declined by $1.5 billion. The import of iron and steel declined by 12.3 per cent in 2018-19 and further by 22 per cent in 2019-20. In 2019-20, the import of organic chemicals declined by 7.3 per cent and fertilizers by 11.4 per cent.
EY India chief economic adviser D.K. Srivastava said that India must focus on manufacturing to boost economic growth and jobs amid a section of analysts noting that replacing Chinese imports would not be easy.
India, on its part, has moved fast to give a push to manufacturing. The states including Uttar Pradesh, Madhya Pradesh, Maharashtra, Gujarat and Rajasthan have done their bit too by bringing in the pending labor reforms.
Swadeshi Jagran Manch national co-convener Ashwani Mahajan said that India must impose the right tariff, anti-dumping duties and other measures like non-tariff barrier to protect domestic producers.
China’s military aggression in Galwan valley recently, which left 20 Indian soldiers dead, has altered India’s economic relationship with the dragon nation like never before..