The Doklam plateau crisis of 2017 may have formally ended in August of that year, but as of early 2019 the underlying tensions between India and China remain palpable. Border infrastructure continues to expand on both sides, and public sentiment in India has increasingly turned toward the idea of an economic pushback against Beijing — specifically, a boycott of Chinese goods. The question, however, is not whether Indians feel strongly about the issue, but whether a meaningful reduction in reliance on Chinese imports is practically achievable without causing severe disruption to the Indian economy.
To answer that, we must begin with the numbers that frame the relationship.
In the financial year 2017–18, India imported approximately US$76.4 billion worth of goods from China while exporting only US$13.4 billion in return, resulting in a trade deficit of around US$63 billion. By March 2019, provisional figures for 2018–19 suggest the deficit has climbed further, crossing US$65 billion. Electronics, machinery, organic chemicals, plastics, and active pharmaceutical ingredients (APIs) dominate the import basket. Roughly 40–42 per cent of India’s total imports from China fall under the broad category of electrical and non-electrical machinery, including smartphones, telecommunications equipment, and consumer appliances.
This imbalance is not new, yet its scale has grown dramatically over the past decade. In 2008–09, the deficit stood at around US$20 billion. A decade later it is more than three times larger. The asymmetry gives China considerable leverage: any sudden disruption in supply chains would hurt India far more than a comparable disruption would hurt China.
Many citizens instinctively call for an outright government ban on Chinese products. Such demands, however heartfelt, overlook binding international commitments. India is a founding member of the World Trade Organization (WTO) and is bound by the principles of non-discrimination enshrined in the General Agreement on Tariffs and Trade (GATT). A blanket ban on imports from one specific country without a legally justifiable reason (national security exceptions under Article XXI are narrow and invite retaliation) would violate WTO rules and trigger complaints, possible sanctions, and retaliatory tariffs on Indian exports such as pharmaceuticals, textiles, and marine products. Even during periods of military tension, few countries resort to comprehensive trade bans for precisely this reason.
A sudden unilateral ban would also create immediate domestic shortages. India’s manufacturing ecosystem is not yet in a position to replace US$65–70 billion worth of annual imports overnight. Smartphones provide a stark illustration: in 2018–19, nearly 70 per cent of the Indian market by volume consisted of Chinese brands or devices assembled with heavy Chinese component content. An abrupt disappearance of these products would lead to price spikes, black marketing, and supply bottlenecks in a sector that has become integral to daily life and the digital economy.
The realistic path forward, therefore, is not prohibition but gradual, strategic substitution combined with long-term domestic capacity building.
One viable short-to-medium-term strategy is diversification of import sources. Several economies already produce goods similar to those India currently sources from China, often at marginally higher but still competitive prices:
- Tiwan: A world leader in semiconductor fabrication and electronics contract manufacturing, Taiwan supplied only about US$4.5 billion worth of goods to India in 2018–19, less than 6 per cent of China’s figure. There exists significant untapped potential in integrated circuits, display panels, and precision machinery.
- South Korea and Japan: Both nations are major exporters of high-end electronics, automotive components, and capital goods. Brands such as Samsung and LG already manufacture substantial volumes inside India, but many critical components still originate in China. Deeper trade agreements and investment incentives could shift more of the supply chain eastward.
- Vietnam and Thailand: These Southeast Asian nations have emerged as alternative hubs for footwear, apparel, and light electronics as global companies pursue a “China Plus One” strategy.
Encouragingly, early signs of such diversification were visible by early 2019. Samsung opened the world’s largest mobile phone manufacturing facility in Noida in July 2018, and Apple began trial production of the iPhone in Bengaluru. Vietnam’s exports to India grew by over 50 per cent year-on-year in several categories. These are still small shifts in the larger picture, but they demonstrate that alternative supply chains can be activated with the right policy push.
At the governmental level, India has several instruments available. The Production Linked Incentive (PLI) scheme, though formally launched only in 2020, had precursors in sector-specific policies from 2019 onward. Phased Manufacturing Programmes (PMP) for mobile phones and components were already increasing effective customs duties on finished products while keeping duties low on components — a textbook import-substitution tactic. Extending similar roadmaps to APIs, medical devices, solar panels, and telecom equipment could systematically reduce Chinese dominance over the next five to seven years.
Consumers and retailers also have a role, albeit limited. Surveys conducted in late 2018 and early 2019 showed that a significant percentage of urban Indian consumers — sometimes as high as 60–70 per cent in online polls — expressed willingness to pay a modest premium (10–20 per cent) for non-Chinese alternatives, provided quality and availability were comparable. Retail chains and e-commerce platforms could respond by prominently labeling country of origin and creating dedicated “non-China” sections, much as some stores already highlight “Made in India” products. Market feedback of this nature sends clear signals up the supply chain to importers and manufacturers.
Diplomacy cannot be ignored either. India’s relations with Taiwan, historically constrained by the One China policy, began showing subtle but meaningful evolution by 2019. Investment coordination agreements were upgraded, Taiwanese firms were actively courted for electronics and semiconductor parks, and high-level visits — while not yet at the Prime Ministerial level — increased in frequency. Any deepening of economic ties with Taipei carries both commercial benefits and strategic messaging value for Beijing, especially on issues such as border infrastructure and Bhutan.
None of this suggests that a complete boycott is feasible in the near term. Everyday realities impose limits. A lower-middle-class family purchasing a ₹9,000 smartphone or a small trader stocking affordable festive lights cannot always wait for perfect alternatives to materialize. Yet every percentage point reduction in the share of Chinese goods matters. If India can bring the trade deficit down from US$65 billion to US$40 billion over five years while simultaneously expanding domestic manufacturing capacity, the strategic and economic payoff would be substantial.
The government, industry, and citizens must therefore pursue a three-pronged approach:
- Accelerate domestic manufacturing through continued policy support, infrastructure development (industrial corridors, plug-and-play parks), and skill development.
- Diversify import sources by deepening trade and investment ties with Taiwan, South Korea, Japan, Vietnam, and select European nations.
- Harness consumer sentiment responsibly — not through unrealistic calls for total boycott, but by rewarding companies that proactively reduce Chinese sourcing.
By early 2019, the idea of “boycotting China” had moved from social-media outrage to conference-room discussions among policymakers and corporate leaders. The transformation of that sentiment into structured, sustainable policy remains one of independent India’s most important economic challenges of the coming decade. Success will not be measured by dramatic gestures but by patient, incremental progress on factory floors, in trade negotiation rooms, and on retail shelves across the country.
The Doklam standoff reminded India of the costs of strategic dependence. The years ahead will determine whether the country can convert that lesson into lasting economic resilience.
Post a Comment