Hindi-Chini Buy-Buy: India needs to become self-reliant to safeguard its industries
We continue to import a lot of rubbish that can be easily made in India and at comparatively competitive prices, employing millions of Indians and using our raw materials
Indians woke up from their deep slumber on the morning of 20 October 1962, when Zhou En Lai, the then premier of China, who had lend his voice to the “Panch Sheel” policy of Jawaharlal Nehru, took the boldest step of attacking India, which was totally unprepared for this military onslaught. Zhou En Lai wanted to teach India a ‘lesson’. And he did!
In the three weeks old war, which India lost humiliatingly, because of inadequate equipment and personnel; our borders were truly unguarded. Since India did not belong to any power blocks and military alliances, ‘friendly’ western countries gave lip service while Russia played behind-the-scene and brokered a ceasefire.
After this three-week war, it has not been Hindi-Chini bhai-bhai. And it has taken more than a couple of decades, in real sense, to normalize relations, though outwardly.
In the meantime, every attempt made by India to become a permanent member of the UN Security Council, has been met with opposition from China, due presumably to their own interests and goaded by their political ally Pakistan which does not want India in that exalted position.
The stalemate in this area continues. After all, Hindi-Chini are bhai-bhai, aren’t they?
However, with the liberalization of trade, the two-way biz has been slowly improving, with Chinese exports to India exceeding their imports. It took a long time for the Indian industry to put up resistance and ensure inferior quality equipments, particularly for the power industry, coming into the country. The import duty on certain categories was increased to 21% to protect the indigenous manufacturers.
Whether the poor quality supplies were as a result of technical incompetence of the supplying factories or intentional to retard the Indian progress would be interesting to debate, but will then get us nowhere.
However, in the meantime, due to Chinese policy of permitting foreign direct investment, all over the country thousands of manufacturing units came up, resulting in a gigantic leap forward. Millions of Chinese became gainfully employed and western investors were not aware of the poor wages paid to the workers. Their profits on investments are important and not pontification of virtues.
Literally, overnight, China became the principal supplier to the US of thousands of items; it became the leader in the apparel industry with Bangladesh becoming a close second; India, despite its technical advantage of raw materials and trained man/woman power lags behind as the third, even today.
In the meanwhile, with the wealth created, China has become, in the last one decade, the holder of trillions of dollars worth of US Treasury bonds. Yuan (also known as the Remenbi) which is not allowed to float freely due to the strict Chinese central bank policy, is inching its way to dislodge the mighty dollar as the world's reserve and strongest currency!
Perhaps, the yuan is more dependable than the US dollar!
As we turn towards India, the export of iron ore to China took a real beating last year, thanks to our own home-grown corruption and the associated scams on its export. The matter is still under investigation, but export is banned for the time being. Buyers, naturally, are smart enough to tap new sources of supply.
In the past, millions of tonnes of iron ore from Karnataka and Goa have been shipped to China to keep their steel mills going, but, because of this Indian ban, and thanks to the slowdown experienced in the steel market world wide, revival of the sector is likely only in the second part of 2013. India needs to take this as a wake up call and do whatever is needed to prevent such stoppage of shipments.
Meanwhile, with the kitty bulging with trillions of dollars and to support the indigenous manufacturers of various equipments, China has embarked on an overseas lending spree!
Project financing by China with various Indian companies have reached a substantial amount of $6.602 billion in terms of investments and debts. Lanco group (power projects), Reliance Energy (renewal energy) and Uttam Galva Steel are the major organizations who have sourced their funds from China!
It is a wonder why Indian banks were not able to at least match their Chinese counterparts in capturing the Indian business that has gone to China? If such a situation was in any of the western countries, their president or prime minister would have taken it upon himself and led a business delegation to champion their cause and seek directly to influence the country leaders concerned.
In India, unfortunately, our leaders are battling more with their own political opponents to hold on to their positions, rather than go all out on a war footing to seek business for the country and ensure employment and productivity on our own soil.
As for China, it is still Hindi-Chini bhai-bhai and all that we do and continue to do, is to import a lot of rubbish that can be easily made in India and at comparatively competitive prices, employing millions of Indians and using national raw materials.
We need to seriously reconsider our relations with China, strongly on commercial terms so as to flex our muscle on the political arena. Only a stronger commercial approach, in terms of curtailing our imports from China will give them the wake-up call.
(More: Articles by AK Ramdas)
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
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