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China-India relations
This Week in AsiaEconomics

India’s bid for self-reliance takes a hit as Chinese goods found to be critical across industries

  • A new study from a state-backed Indian university has found that some sectors of the country’s economy couldn’t function without Chinese imports
  • It recommended a re-evaluation of Indian PM Narendra Modi’s signature self-reliance campaign, with more of a focus on high-end manufacturing

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Hindu nationalist protesters shout slogans in New Delhi as they demand a boycott of Chinese products in 2016. A new study has found that Chinese imports play a crucial role in India’s economy. Photo: Reuters
Kunal Purohit
As India seeks to cut its reliance on China, a new report has raised questions about the feasibility of economic decoupling as Chinese goods were found to not only be critical across various sectors, but in some cases “preferred” by Indian manufacturers.
The study by the Indian Institute of Foreign Trade (IIFT), a state-backed university in New Delhi, found that Chinese imports were boosting India’s manufacturing and its exports in key sectors, including inorganic chemicals, pharmaceuticals, iron and steel.

It also found that rising imports in all the selected industries, except iron and steel, had led to a corresponding rise in output in those industries.

Employees at a garment factory in India. The study found that of the 32 product subcategories imported from China, it was the cheapest supplier in one-third of cases. Photo: Bloomberg
Employees at a garment factory in India. The study found that of the 32 product subcategories imported from China, it was the cheapest supplier in one-third of cases. Photo: Bloomberg
From sectors where Chinese goods were the cheapest choice to industries where they were the sole option, the paper highlighted the crucial role of such imports and recommended a re-evaluation of Prime Minister Narendra Modi’s campaign to make India self-reliant.

“The current policy thrust on ‘self-reliance’, or atmanirbhar bharat, will not be effective unless the domestic manufacturing is propelled to high-technology products. Then rising imports will not be a concern as they lead to an increase in exports,” stated the paper by IIFT Professor Sunitha Raju.

It recommended the Indian government lower trade barriers and encourage imports to strengthen the country’s domestic manufacturing capabilities. Such an approach, the paper argued, would boost manufacturing growth and create greater employment opportunities.

India’s Commerce Ministry declined to comment on the issue when contacted by This Week in Asia.

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