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Business News/ Opinion / Columns/  Opinion | Seize the chance that China has given us of an economic rebirth
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Opinion | Seize the chance that China has given us of an economic rebirth

Banning Chinese apps was a great move but let’s cut the emotions and think long-term strategy

With the vast Indian market gone, their revenues and value will be hit—and tech is a field that China wants to dominate globallyPremium
With the vast Indian market gone, their revenues and value will be hit—and tech is a field that China wants to dominate globally

Every day, we receive messages asking us to boycott Chinese products. Some of these messages are purely emotional, while some also give lists of Chinese brands—though a few of them mistakenly include Taiwanese brands like HTC and Asus.

While patriotic fervour is great, we need to be rational and intelligent in our response. My family has not consciously bought a Chinese product for years, but we are fully aware that much of what is inside a product or even the product itself may be made in China, regardless of brand nationality. As consumers, we can do little about that, and in many cases, even the company can’t even if it wanted to, at least right now, given the truths of competitive business and global supply chains. So let’s be real.

Rajiv Bajaj, managing director of Bajaj Auto, seems to have become unpopular in some circles for saying that it will be very tough to sever ties with China abruptly. But he is just being honest. He says that last year, Bajaj Auto used about 1,000 crore of Chinese components, and exported 15,000 crore of two- and three-wheelers. What is wrong with that? And I am sure Bajaj will happily buy the stuff from Indian firms if they assure him the same quality and value for money.

Most of us know that 60-70% of the active pharmaceutical ingredients (API) of many of our common medicines, from paracetamol to antibiotics, come from China. China produces a staggering 28% of the world’s manufactured output. Much of the very machinery that Indian companies use to produce made-in-India products come from China. One can’t wish all that away overnight. India has imposed higher import duties in the last three budgets on simple-to-make consumer goods imported mainly from China—candles, kites, clocks, plastic toys, and so on, which is absolutely the right thing to do. But delaying customs clearance of Chinese imports is silly—just think of your everyday medicines. Until India builds its own capabilities, there is no way we can hurt China without hurting ourselves much more.

Last week, the government banned 59 Chinese apps and that is a great move. Many of these apps are owned by flagship Chinese tech companies. With the vast Indian market gone, their revenues and value will be hit—and tech is a field that China wants to dominate globally. Bytedance, the TikTok company, was set to go public in the US at an estimated valuation of $110 billion. Today, without what was TikTok’s largest market in the world, it’s anyone’s guess what the valuation will be, or if the company will go through with its share issue plan. Secondly, apps are an area where Indian firms can compete worldwide. The exit of TikTok and Helo (also from ByteDance) is a huge opportunity for Indian apps like Chingari, Roposo and Sharechat. And it’s a truly global opportunity. Last week, Apple flagged TikTok as an app that may be stealing user data from iPhones. TikTok issued denials, but the evidence of it looks quite compelling.

We need to look at long-term strategy now. This has to be massively multi-dimensional, and must cover every aspect of the value chain—from education to manufacturing and cutting-edge tech fields where India can have a winning chance, as well as trade ties with countries, and effective diplomacy. But the path forward must begin with asking two questions: Why are we in this position? And what are the good things that China did to get where it has?

One, our laws have made sure that our small enterprises never attain scale. China did exactly the opposite. Even today in India, with supposedly much greater ease of doing business, there are too many regulatory shackles, too many clearances required, and too many forms to fill. As a result, as a friend put it eloquently, we make superb satellites, but can’t make a safe safety pin. Two, we need a single free national market. The goods and services tax (GST) has tried to create that, but even after three years, the system remains convoluted, and our policymakers keep promising to simplify it while bureaucrats impose different GST rates on rotis and paranthas.

Three, we must slash our bureaucracy. Digitization may have brought corruption down sharply, but status quo-ism, sloth, inefficiency and abuse of power are still rampant. Ask any Indian firm that runs factories both here and in China—the two experiences are starkly different.

Four, infrastructure. Five, use the huge brain power deposits India has, both at home and abroad, in the private sector and academia. Ask them for ideas and best practices; make them partners. China’s rise owes a great deal to its diaspora. India needs to do something concrete, beyond the annual Pravasi Bharatiya Divas ritual.

We should look at the situation precipitated by China as a once-in-a-lifetime opportunity for a national economic rebirth, but we need vision, commitment and patient determination. We need to focus the patriotism running high today on clear long-term goals. Stress and challenges bring out the best in good people. In just two months, India moved from near-zero production to being the world’s second biggest manufacturer of personal protective equipment (PPE) kits. So, carpe diem. But not in emotional haste.

Sandipan Deb is a former editor of ‘Financial Express’, and founder-editor of ‘Open’ and ‘Swarajya’ magazines

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Published: 05 Jul 2020, 08:26 PM IST
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