Deep penetration of imports from China in Indian market

Posted on 18th Jun 2020 by rohit kumar

After Monday night's clash with China, there is a loud demand to move away from the products there. Although it is easy to think so, but it is very difficult to do. If 'Made in India' is written on your phone, do not fall into confusion. Much of it belongs to China. According to government data, from April last year to February this year, the country imported $ 7.5 billion worth of PCB and mobile phone parts. Of these, 45 percent of the parts came from China.

 

Hariom Rai of Lava International, a leading domestic mobile phone manufacturer, said, "We are heavily dependent on China for these parts. 60 to 80 percent of the parts used in our phones are imported and 20 to 50 percent of this import is from China. A few days ago, Prime Minister Narendra Modi had called for reducing dependence on imports from the country and after a clash with China on the border, the demand for a ban on the products there may pick up. But the reality is that India is largely dependent on China in the fields of electronics, mobile equipment, vehicles, medicine, telecommunications equipment, fertilizer, etc. It may take a lot of time for India to reduce its dependence on such a large scale.

 

 

For instance, in the automobile industry, India imports parts worth $ 17.6 billion annually, of which 25-27 percent are from China. Officials of vehicle components manufacturer, Ecma, say that we have a greater dependence on China and also get the necessary parts at a much lower cost than other countries. A senior executive of a leading car company said, "To get from BS4 to BS6 engines, you have to develop the technology. If you want to do this soon, then go to China and bring technology from there. If you want to make electric vehicles, then you will get very few parts in India and you have to go to China. Suddenly the demand increases and if you want a year and a half to make vendor parts, then import from China.

 

 

The pharmaceutical industry has the same story. India is heavily dependent on China for chemical elements (APIs) and other important materials used in medicine. China is also offering all this at a 30 percent lower price than other countries. Yogin Majumdar, the owner of the bulk drug unit and head of the Bulk Drugs Committee at IDMA, said, "We have to depend on China for APIs and other key ingredients, 65 to 70 percent." Such high dependence can also result in loss. Recently there was a shortage of vitamin C and some common antibiotics in the market as manufacturers stopped production due to the Covid-19 epidemic in China. The story of the fertilizer industry is also no different. China accounts for 45 percent of India's total DAP imports. About 13 percent of the urea imports in the country are also from China as domestic producers of DAP and urea are unable to meet the demand. Ravichandran, group head at ICRA, says, "Import can be done from West Asia, North Africa or America but the price will increase by 25-30%." However, now four-five government plants are increasing the capacity of urea production, which can lead to self-sufficiency.

 

 

Telecommunication equipment manufacturers say that their industry also imports extensively from China. This does not include imports from Chinese companies such as Huawei and ZTE. European companies also import, but their factories are also in China. But telecom companies have no objection to this because Chinese banks working closely with Chinese telecom manufacturers give long term loans to Indian companies as well.

 

 

China's dominance in consumer electronics is not hidden from anyone. If you have a LED television at home, then there is a possibility that the panel used in it came from China. This is because 80 percent of the LED panels in the country are sourced from there. A top executive of a big TV maker said, "There will be an investment of about Rs 38,000 crore in setting up a LED factory. Unless they are needed on a large scale in India or India does not become a base for their exports, no factory will be set up. ' China's hold on India's TV industry shows that from April last year to February this year, India imported more than 81,000 crore TV parts from there.

 

 

In consumer durable equipment such as air conditioners, 60% of the price is that of a compressor. Compressor factories in India have been set up by only a few companies, so about 80 percent of the compressors are imported from China. However, some companies like Blue Star are preparing to set up a factory here. "This is the right time to increase local manufacturing and reduce dependence on a country like China for imports," says Blue Star India managing director B Thyagarajan.