More symbolic than punitive

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  More symbolic than punitive

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• Conflict and more conflict: Due to the Galwan valley incident in June 2020, many Indians were agitated enough to demand a total boycott of Chinese products, and promotion of Indian industry instead. The sentiment is understandable, and the desire to hit back economically, especially in light of "Atmanirbhar Bharat" and Vocal for Local is clear-cut.
• Trade deficit: India's deficit in bilateral trade has been reducing now, as imports have reduced. Lesser no. of cellular phones are imported now, year on year. The products exports and imports data for 2019 were $17 b and $68 b, resp. What India imports from China is 3% of their total exports of $2500 billion. Creating Indian substitutes quickly will be impossible.
• Nature of imports: India imports many high value-added, technologically-oriented, labour-intensive and inelastic products. 

1. 40% imports are electronic items and medical instruments
2. Rest are low-tech, labour-intensive inelastic products like APIs (active pharma ingredients), fertilisers, chemicals, toys
3. In coming 5 years, India can substitute upto 1/3 of current imports (TVs, smartphones, auto components, solar PV cells, telecom equipments) by building a mfg base here

• Source of FDI: China invested $1.8 b between 2015 to 2019, in sectors like automobiles, services, electrical equipment, etc. Some brandname startup investments by the Chinese have been PayTM, Byju's, Bigbasket, Oyo, Ola, etc. These investments generated employment, and replacing would be tough. A focus area would be to try and make these startups profitable (most are not).
• How manufacturing evolved: Through the post second world war period, many large groups (conglomerates) evolved in the West. They were large groups doing many things together, often seeming disconnected. After saturation arrived in their markets, they moved towards East Asia in 1970s, and later into China and Hong Kong in 1990s. Then saturation arrived there as well, so they're moving into the Philippines and Thailand. Today, it may be India's turn to attract these conglomerates' attention.
• Is the bus missed for sure: What China did in 30 years was a manufacturing miracle. Can India really repeat it now, especially as totally new and less labour-intensive technologies like A.I., machine learning and robotics are taking hold? India must work towards economies of scale, but should be ready to find its own indigenous solutions.

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