Can India Afford Economic Boycott of China after Ladakh?
By Riaz Haq
CA
Indian consumers are hooked to a whole range of Chinese products. India's industry sources critical components from China. Indian startups rely on Chinese venture capital. Can Indians really afford to boycott China without seriously hurting themselves after the killing of Indian soldiers by the Chinese Army in Ladakh? Let's look at the data.
Volume of China-India Trade
India accounts for $70 billion of China's export, less than 3% of the country's $2.5 trillion in exports. Chinese products make up about 18% of India's total imports.
India imports almost seven times more from China than it exports to it, according to Indian media reports. India runs a huge trade deficit with China – its largest with any country. In 2018-19, India’s exports to China constituted a mere $16.7 billion, while imports were $70.3 billion, leaving a trade deficit of $53.6 billion.
Indian Industries Dependence on China
Indian industry depends on China for a range of raw materials. About a fifth of components used by Indian automobile industry come from China. 70 percent of all electronic components used by Indian companies are imported from China.
Over 45% of consumer durables, 70% of APIs (active pharmaceutical ingredients) come from China. Nearly 75% of the telecom equipment used by Indian carriers is from China, according to the Sunday Guardian.
Indian Startup Venture Capital
China is the biggest source of venture capital in India. Chinese VCs have poured about $4 billion in 90 startups in India. Two-thirds of Indian start-ups valued at more than $1 billion have at least one Chinese investor. High-profile startups like Byju, Flipkart, Ola, PayTM and Zomato.
India's startup ecosystem continues to be dependent on large swathes of foreign funding given the ongoing absence of home-grown pools of capital. It will face significant near-to-medium term cash constraints if investors from the world’s second-largest economy walk away, according to Economic Times.
Summary: With growing Chinese trade and investment in India, the Indian economy has become significantly dependent on China. Chinese VCs have poured about $4 billion in 90 startups in India. Two-thirds of Indian start-ups valued at more than $1 billion have at least one Chinese investor. About a fifth of components used by Indian automobile industry come from China. 70 percent of all electronic components used by Indian companies are imported from China. Similarly, 45 percent of consumer durables, 70% of APIs (active pharmaceutical ingredients) come from China. Nearly 75% of the telecom equipment used by Indian carriers is from China, according to the Sunday Guardan. Indians cannot boycott China without seriously hurting themselves.
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