Impact of Chinese Products on Indian Economy

Chinese products have become inevitable in our day to day life from needle to toys, electronic gadgets, hot water bottles, cell phones, televisions, crackers, car components, textiles, garments, etc. In India, Chinese products are sold and the main profit moves to China, a rival county of India. When Indians buy Chinese products indirectly they strengthen the Chinese economy and weaken the Indian economy. In this column, we will discuss the impact of Chinese products on Indian economy.

There are several reasons why Chinese products are sold in Indian markets

There are Chinese versions of products at a much cheaper price. The price of Chinese goods is 10%-70% lower than that of Indian goods.

Unfortunately, Indian people run for cheaper products. They do not check the quality of the products.

There are electronic products or gadgets like Mobile Phones, Computers, mouse, speakers, CPU that contain more features at cheaper rates.

Some products like cell phone accessories are assembled in China like Apple, Sony, Samsung the world brands of several items.

To promote domestic industries the Chinese government imposes a lesser tax that leads to the low price of a product.

In some cases, security parameters are compromised. Regrind material is used instead of plastic. In this way, the making cost is lowered.

There are instances when many branded products like Samsung, Apple, Sony are copied and sold at a very cheap rate in Indian markets.

It is not that India cannot produce such products. Here many problems or drawbacks come into force

India lacks skilled laborers because in our country people are not interested in technical education.

The government does not set up Industries nor does it encourage private concerns or individuals to set up industries. Here the problem of red-tapism and corruption at various levels become a great hindrance.

The government imposes a heavy tax burden on domestic industries. This increases the price of furnished goods.

In comparison to China, India is far behind to provide infrastructure facilities like transport facilities, electricity supply, availability of land, etc.

The government should work on these problems so that India can also produce products at a cheaper rate. This will strengthen the Indian economy and solve the unemployment problem.

The Government of India should concentrate on improving the skills of Indian laborers in the field of manufacturing of electronic goods, small-scale industries like Jute, environment-friendly crackers, etc. Apart from this India seriously needs to work on its infrastructure and efficient use of energy and other natural resources to compete with the cost level and quality of Chinese Products.

 

Chinese Product’s Strategy &  Harmful Effects

Chinese work on the strategy of mass production and mass consumption. The main reason for the low cost is the low capital investment and the easily available labor at cheap wages. The government of China has taken an export-friendly policy that allows domestic companies to buy raw material from around the world and sell the end products back to the world.

Chinese products are of low quality, for example, firecrackers. Chinese crackers contain sulfur which is more dangerous than Nitrate and create a lot of pollution in the environment. Since the Chinese crackers are cheaper than the Indian crackers, they manage to attract unconscious Indians.

The unsafe Chinese electronic goods are of inferior quality and do not come with any guarantee or service. Chinese electronic gadgets like toys become faulty very soon. These products are not long-lasting also.

The third class products that are otherwise of no use to them reach India and sold here.

Since these types of machinery or parts are assembled in China, security parameters are compromised. Owing to this the incidents of blasts of smartphones or electronic gadgets take place.

When these products become faulty or useless they are of no use and no repair possible. Then these products or gadgets get converted to wastages leading to huge pollution in the environment. Many types of chronic diseases occur.

Why cannot India ban Chinese Products

Many people in India promote the idea of banning Chinese products. India can not ban products of any country whether be it China or any other country. There are various reasons for this:

The first reason is that both India and China are WTO members and bound to WTO rules. Each country has to grant MFN status to another member country. Due to this, India cannot discriminate against China. But in order to protect the domestic industries, the Government imposes an anti-dumping duty. An anti-dumping duty is a protectionist tariff that a government imposes on foreign imports delivering a cheap quality of products and priced below fair market value.

The second reason is that India also exports products like iron ore, textile, auto components, fruits, vegetables, etc. to China. Move to close Chinese imports will attract the same treatment from China. This will also hurt the Indian economy as India exports about $16 billion to China.

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2 thoughts on “Impact of Chinese Products on Indian Economy”

  1. Nice and informative post!
    Few things to add:
    You did mention about export figure ($16 billion) but didn’t mention about the import figures which was worth knowing. Below are the excerpts from the Business Standard (https://www.business-standard.com/article/economy-policy/how-chinese-goods-are-choking-indian-industry-and-economy-the-hard-numbers-118072800622_1.html):
    “In a decade to 2017-18, India’s exports to China rose by $2.5 billion. In the same period, China’s imports in India rose by $50 billion. India registered a trade deficit of $157 billion in 2017-18.”
    “About 85-90 per cent of toy market space is commanded by Chinese products, the report says. It has affected 50 per cent of the domestic toy industry.
    Low-priced Chinese toys are either mass-produced or are rejects from other countries and are diverted to Indian sub-continent/ Africa. Further, Chinese toys are toxic in high proportion, it says.”
    Other than this, who is not aware about the quality of the chinese goods. Considering India as a dumping ground for low quality (garbage) of steel, plastic, electronics etc. should not be promoted else the day is not far when we Indian will suffocate to death.
    Things which we can do to help ourselves:
    1. Always “use quality products not the cheap priced and cheap quality products”
    2. Promote domestic industry and goods manufactured domestically (Govt and in-person too).
    3. Focus more on technical education and upcoming trends of the industry
    4. Believe in innovation

    Reply

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