NEW DELHI — China’s invasion of India in 1962 was perhaps less of a humiliation for India than Beijing’s latest attempt at capturing its market.
Whether it is New Delhi or Madras or Bangalore or Ahmedabad or Cochin or Shillong, cheap Chinese consumer goods have flooded the country’s stores. Dry cell batteries, electric irons, ceiling fans, toys and cycles are among a host of other items which are giving homemade goods a very hard time.
What was a trickle six months ago is now a torrent which, incidentally, has the support of shopkeepers and consumers. While retailers receive higher commissions for Chinese goods than for most made-in-India labels, buyers are happy that they are getting higher quality at lower prices.
The reason behind the Chinese advantage is simple: labor is cheaper and workers are more productive in China than it is in India.
Yet, there is a suspicion that many of the items entering India are not really world-class, and that they are being dumped here for want of a better outlet. In fact, they do not have a market even in China, because they are largely unaffordable there.
Although New Delhi authorities have begun an antidumping investigation, this exercise can only be futile. Dumping is hard to prove, and antidumping duties harder to implement.
Trickier still is the fact that the probe comes at a time when India and China have not only resolved to settle their border issue, but also to improve trade relations.
Indian Commerce and Industry Minister Murasoli Maran went to Beijing a few months ago and signed a memorandum of understanding for stronger cooperation in fields as diverse as metallurgy, agriculture, transport, information technology, electronics and drugs.
Although the balance of business between the two nations is now clearly in favor of China, India’s exports have been steadily growing.
A wrong step at this juncture would derail the whole process and create a sense of hostility in Beijing, whose ties with New Delhi have always remained tenuous, given India’s stand on Tibet.
If the Dalai Lama has been allowed to operate freely from India — he even heads a government-in-exile at the northern Indian mountain resort of Dharamsala — the refuge given to the boy Karmapa about a year ago has been an added irritant that Beijing’s leadership finds difficult to ignore.
For New Delhi these may not be as worrying as the imminent entry of China into the World Trade Organization, an idea endorsed by Washington.
Beijing’s geographical spread will then include Hong Kong, Taiwan and Macau, and in an interdependent world, India cannot afford to be stricter that what it already is in tackling Chinese dumping.
A hike in Indian import duties will attract similar levies in China and elsewhere, and this is bound to hurt Indian exports, particularly at a time when they are turning the corner.
When Beijing finally joins the WTO — which is just few months away — things might become more uncomfortable for India than they already are if it decides to come down heavily on Chinese mass imports.
Admittedly, what now comes from China is only marginally better than what is available in India, and most of those products are not really of export-quality. And this is where the key lies, or ought to.
It is high time that Indian manufacturers woke up to the fact that 50-odd years after the country became free from its colonial yoke they cannot expect government protection, especially now that economics drives political forces and not the other way round.
Mukesh Ambani, vice chairman of Reliance Industries, one of India’s biggest groups, says, “We need to sort out the fundamental issues that hold back Indian industry.”
Poor infrastructure, high capital costs and rigid labor laws are some of the greatest obstacles that need to be addressed immediately. When the licensing of imports ends in April 2001, the Indian manufacturing sector will be faced with tough, even unpleasant, choices.
For far too long, the Indian consumer has been taken for a ride. He has had to cough up ridiculously high prices for substandard stuff. He has had to grapple with callous after-sales service.
The Chinese imports have revealed to the Indian buyer a brighter and better world.
But this can well be the proverbial tip of the iceberg. When imports begin in earnest after April, India’s home produce will take a severe knocking all around. But even inferior Chinese goods will be crushed in the deluge of quality and competitiveness.
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