Why India could not afford to put ban on Chinese products?

Since last few days, we have heard news that India could not be a part of NSG group because of china and other few countries. In the reaction over this issue, some political parties are forcing Indian citizens to stop use of Chinese products and requesting government to stop import of Chinese products and put ban on them. However, we could not afford to put ban on Chinese products. I have many reasons to prove this statement.

India is a country where people are divided into three classes as per their income:

 1) Upper Class (rich) 2) Middle Class and 3) Lower class (poor). Hardly 10% of Indian population belong to upper class. Majority of Indian citizens come under middle class. Middle class family could not afford to buy standard products for their daily use because they are very expensive. The maximum spending of Indian middle class people is on consumer durables like Electronic appliances, Clothes, Vehicle and many more. However, these people are smart buyers. They want quality products/ services at low price. This is the main factor that works for china to grab the large consumer market share in India. Below graph shows that india’s import from china has gradually increased in rapid speed. In just five years China’s share in india’s import has increased from 11.75% in 2010-11 to 15.08% in 2015-16. Major importing products are Electrical machineries and equipment. The import of electronic goods from china has increased year by year.

Low price is not the only factor for increasing import from china. There are other factors also like mass production, population growth, R&D etc. have major impact on high import from china which I described below.

·         Population:- India is the 2^nd largest country after china in terms of population. Population of India has been increasing year by year on faster way. Due to large number of people, demands for consumer durables are high. However, due to lack of supply, government has imported consumer durables goods from china.

·    Production:- Dragons believe in mass production. Due to mass production, the prices of goods are coming down. Low labor cost, low price raw material and production favorable policies can make china world’s biggest production hub. Many big companies like apple, Samsung, LG, Dell and other heavy machineries manufacturers have production facilities in china. Because of effective mass production capacity, china has capacity to fill the gap between demand and supply in India.

·         R&D:- It fact that humans always need change over a period of time in their life. Due to change in their life, their need will also be changed. Chinese are expert to sense the consumer behavior and their changing demands. They come with new innovative products into market. This can only happen if government put emphasis on R&D. This country encourages innovation and allocate good share of their budget for R&D for creating new things. Beside this, Indian government is less interested in R&D. China spends 2.5% of total GDP on research and innovation while india is spending hardly 0.8% of total GDP. Dragons are 2ns in the list of top R&D countries in the world after India. Because of government encouragement, china comes with several new innovative products into market.

Chinese products involve in our daily life. From single screw to larger machineries, clothes, raw materials everywhere you can see made in china tag. Mobile or laptop screen on which you are reading this blog has circuit, panel, chip which is made in china. If we put ban on the Chinese products, it will affect the economy of india. Due to high low supply and low demand, inflation will take place. Consumer durables will become more costly.  All the sectors of our country like manufacturer, agriculture, service, and telecommunication will be affected. This ban will not only affect the economy of china but also affect the economy of our country also. Other neighboring countries will also be affected.  Their trade relation with India will also be affected. As a result, India’s relation will be degraded with other countries. This will affect their foreign policies and there might be possibility that they will stop trade with our country. As a result, unemployment will be increase. Inflation will be taken place. Sharemarket will be broken down. At last, India will again enter in the list of underdeveloped country.