This article is written by Lavanya Gupta pursuing BBA LLB(H) from the school of Law, Ansal University. This is an exhaustive article which deals with various modes of execution under the impact of the boycott on Chinese brands with legal aspects.
Table of Contents
Introduction
Developing domestic industries and diversifying its sources of imports is the only way by which India will afford to boycott Chinese products with the hashtag ‘Made in China’. Incidentally, the opposition to the flood of cheap ‘Made in China’ products in the domestic market has been steadily growing over the years. This may hold good if and when India mass-manufactures a vaccine for Corona-19. In one way reminiscent of Mahatma Gandhi’s non-violent resistance to the British Raj, where Indians under occupation forewent Manchester-sewn textiles in favor of “homespun” cloth, the difference between then and now, of course, is that China is not an occupying force. This is the parent organization of the ruling right-wing Bharatiya Janata Party (BJP), whose RSS-indoctrinated Narendra Modi is India’s current prime minister. The campaign “boycott Chinese goods” is going very high and very positively.
What are the main motives to boycott China
China’s share of total imports from India is around 25-30 percent which means more than a quarter of India’s total imports are currently from China. Some parts of this constitute commodities where India does not have significant capacities, but most of China’s imports are due to unfair trade practices, such as dumping, and are non-essential, low-end goods.
The Chinese have left no stone unturned to enter the Indian market with low-priced importations. Chinese imports have plagued many small and medium-sized businesses, and have wiped off toys, clothing, etc.
India cannot deny the fact that we depend on china for many products like
- medical equipment
- pharmaceutical
- chemicals,
- automobile components,
- technologically advanced goods, etc
It is important for the government to change domestic and international policies in these sectors, attract investment, and protect these investments.
Looking at the current situation, the fact that India will boycott Chinese goods overnight seems not possible practically. Instead of a single boycott route, India needs to look for multiple options.
Industries and organizations are calling for import controls by enforcing quantitative restrictions or raising tariff barriers in compliance with the WTO on imports. These include border tax, anti-dumping duty, anti-subsidy / countervailing steps, or basic tariffs on imports
The stalemate at the Galway Valley has changed the mindset of the country towards China and Chinese items. The Swadeshi Jagran Manch, a subsidiary of the Rashtriya Swayamsevak Sangh (RSS), has requested a total restriction on Chinese products and proposed a prohibition on Chinese organizations taking an interest in offering forms in India.
The Department for Promotion of Industry and Internal Trade is chipping away at the system to stop the import of unimportant, modest, and low-quality merchandise from China. The service of business and Industry is probably going to quick track measures to eliminate Chinese imports and a proposition will be introduced soon.
At present, India is testing around 35 instances of ‘dumping’ of products from China, and the administration has dropped ventures worth Rs 471 crore having Chinese investment in it.
Impact on Employment
The biggest impact of this boycott may be on the thousands of people that are employed by companies like Xiaomi, Vivo, and Oppo in their factories in India.
Oppo, Realme, and OnePlus smartphones are manufactured at a massive facility in New Delhi, which usually employs some 10,000 workers, but its workforce was cut down to 3,000 as per government orders due to the Coronavirus outbreak. At this facility, the BBK-owned brands assemble, test, and distribute smartphones in the country, along with exporting some units to other countries.
Vivo has a separate factory in Noida, which employs some 2,000 people for assembling, testing, and distributing its devices. Vivo also has a second factory, which was set up earlier this year, which can employ 8,000 workers under normal working conditions.
Chinese companies play an important role in India being the second-largest mobile handset manufacturer in the world.
And it’s not just the employment generated in these factories. All through the value chain, there is indirect employment via retailers, marketing, public relations, advertisements, among other things. Vivo, for instance, has won title sponsorship for the IPL series for seven seasons (2016-2022), and will reportedly pay BCCI Rs 2199cr over 5 years.
Challenges
India imports a lot of products from China. Some of these products are raw materials like steel, minerals, etc. Others are finished products. It may be possible for India to prevent the import of finished goods. It may not be economically beneficial. However, it may at least be possible. However, when it involves raw materials like steel and minerals, imports can’t be stopped. It may be possible to modify the source of imports from China to a different country. However, it won’t make sense. If China is selling at a competitive price, another country will buy these products. India will only harm its economy by refusing to shop for cheaper commodities. Many Indian operations have been started by Chinese companies recently.
This has been made possible by the “Make In India” campaign started by Prime Minister Narendra Modi. If a complete boycott of Chinese goods is issued, these companies also will face pressure from China to prevent production in India. The result is going to be a loss of employment in huge numbers. Also since China only imports $2.5 billion worth from India, it can afford to shop for from other countries, and yet its GDP won’t be impacted by the maximum amount. On the opposite hand, since India imports from China in large quantities, it’ll not be easy for India to seek out a replacement for Chinese goods. Finding a substitute source that may match the value and availability of Chinese products is going to be a difficult task. This is the rationale of why the Indian GDP is going to be more impacted during this scenario.
Economic effect
A reduction within the imports of cheaper capital goods would also push up production costs, making products costlier, thereby affecting the consumers and it leads to fewer cheap goods for Indian consumers. Since India also imports a high number of electrical products, it might impact the costs of electrical gadgets and smartphones. Chinese companies like Xiaomi, Oppo, Vivo, and OnePlus nearly control 51 percent of India’s over $8 billion smartphone market. Even within the power sector, India is heavily hooked into China when it involves achieving its renewable energy target.
Power and New & Renewable Energy Minister R K Singh said that the import of India is dependent over 90 percent for meeting its solar equipment in the past three financial years in a written reply to the Lok Sabha last year. A majority of these imports were from China. The value of solar cells was not assembled in modules/panels as the minister informed about the imports from China jumped to $3.41 billion in 2017-18 from $596.73 million in 2013-14. 80 percent of antibiotics and 60 percent of electronic products were imported by India from China in 2018-2019.
Thus, a number of the key sectors of the Indian economy are critically hooked into China. Even though the share of imports from India to China remains low, it might impact China at the end of the day. In 2017, India became the 24th largest exporter in China. If India chooses to boycott, it might impact China’s entry into an outsized market like India, but the intensity of impact would be felt more reception.
The latest trade data, however, shows that India’s bilateral deficit with China has shrunk this year, consistent with a report by The Hindu BusinessLine. India imported 34 percent of goods in the first nine months of the year 2018-2019 and the imports from northern neighbors have declined by nearly 4.5 percent (as against a rise of 14 percent overall). The decline was mostly thanks to the increased exports of petroleum products to China. According to the report, aromatic production capacities of reliance industries found a way in the market of exports with China emerging as one of the main destinations.
Even though it’s going to indicate a reversal within the rising trend within the deficit, there remains a big area of concern – the absence of adequate manufacturing facilities. A number of those sectors would be affected if India decides to boycott Chinese products. India has to reduce its deficit with China and make the production sector strong to produce the goods back in the home country and provide cheap products to the customers.
What can we do
We can replace at least one Chinese product with others, it does not matter whether it is Made in Sri Lanka, Singapore, Malaysia, or any other but NOT CHINA. This can not happen suddenly, it will take time. Well, maybe a few years, but we can make it. We can bring change. Legions of supporters shared photos and memes on Twitter and Facebook, bad-mouthing China as a country and espousing the ills of Chinese apps such as TikTok, which were thought to revel in content unbefitting of “Indian cultural values”.
We have 8 out of 10 products at home which are made in China. If we replace any 2 of them with Indian products (or other than China) then we will have 6 out of 10 Chinese products. And when we start replacing Chinese goods with Indian goods, within a few years we will be able to completely boycott Chinese products. Rs 471 crores contract was terminated by Dedicated Freight Corridor Corporation of India, the ministry of railways PSU which was awarded to Beijing National Railway and research group. China’s tendering for projects involving telecom projects was also barred by India. The campaign “boycott Chinese goods” is going very high and very positively. China is the second-largest trading partner of India, after the USA, with bilateral trade between April to December 2019 totaling $ 64.96 billion. The imports rise from 13.7 percent to 14.1 percent in the year 2019-2020. Toys and engineering goods, electronics, and pharma intermediates were included in the import range. Pharmacy ingredients to make various final formulations were active in India up to 70 percent for imports.
Role of Atma Nirbhar plan
A trade war with China is not the answer. Outraged on social media about boycotting a country and its product is lush with irony, considering the very devices the tweets are posted from are almost entirely Chinese. While India has been actively pushing for local brands to emerge and creating opportunities for global brands to set up manufacturing and increase production in the country, it’s not ready to declare itself entirely self-sufficient just yet. An impact on raw material and machinery that enables the production of various Make in India initiatives, is very significant and employment will be done in India but boycott on Chinese products isn’t a simple restriction on finished products. With inflamed passions, one seeks easy answers. We’re no strangers to demonization and othering, and the Chinese ‘boycott’ is just that. Irrational, untenable, hypocritical, and ultimately, counter-productive. If you’re still incensed enough to throw that LCD TV out your first-floor balcony, make sure you follow through and throw out almost everything else as well. Because you’re almost guaranteed to find a “Made in China” sticker on whatever you touch.
Some legal decisions
The Confederation of All India Traders (CAIT), which represents 7 crore traders and 40,000 trade associations, has announced a boycott of three thousand Chinese products. From June 10 the national campaign launched to boycott the Chinese products all over India is known as ‘Indian goods-our pride’.
“CAIT has held a daily video conference since Annunciation till now, during which prominent business leaders from all the states of the country participated and contemplated the capture of India’s retail market by China. It also analyzed the efforts of the people and decided that the time has come when the traders and other people of the country should unite and boycott Chinese goods and then decided to launch the national campaign”.
“Due to prevailing circumstances of COVID, the nuances and intricacies of the campaign will be inculcated to traders via video conference. Apart from this, CAIT will also run a big campaign across the country through social media and will connect more and more people to this campaign.
The nationwide campaign ran with its president Brij Mohan Agarwal as convenor and Sumit Agrawal and Dhairysheel Patil as co-convenor of the CAIT has constituted a national committee besides having senior trade leaders of all states as its members”. CAIT Chandigarh chapter president Harish Garg said that under this campaign, they’re going to “not only motivate traders to not sell Chinese goods but also urge Indian consumers to shop for indigenous products in situ of Chinese goods and during this way Prime Minister Narendra Modi’s call ‘Vocal for Local’ also will be fructified”.
“ List of about 3,000 products imported from China has been prepared by CAIT and Indian substitutes and alternatives are easily available for Indian customers and they will also not mind because all those things are made in India,” Garg said. The list of three thousand products prepared by CAIT is essentially FMCG, commodity, toys, festive goods, fabrics, textiles, stationery, paper, food items, electrical, electronics, builder hardware, etc. They also said that Indian manufacturers play an important role in Chinese product boycotts and CAIT will work with Indian manufacturers to promote the use of indigenous goods nationwide.
Conclusion
We have been giving money from our country directly and indirectly to China. It is observed that the step of China is not because of enmity but because of the intramural nature of the country. The combination of radical agricultural changes in regulations imposed by the government, social pressure, economic mismanagement, and natural disasters such as droughts and floods in farming regions by great Chinese famine. It is found that Indian imports from China are about 5.2 lac crore and Indian exports are just 1.2 lac crore there is a trade deficit of 4.2 lac crore. The Chinese economy got affected brutally by the banning of many Chinese apps and the import of goods by the Indian government. Just a few steps like removal of Chinese software, saying no to made in china products while buying goods from the market, buying Indian products, and becoming self-dependent on the P.M Modi scheme of “Atma Nirbhar Bharat “. We had no intention to boycott China even after the coronavirus but the way it’s working is wrong and we had to teach them a lesson. This is the right time to become self-independent.
References
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