How China’s Trade Tactics Are Giving Indian Industry a Tight Squeeze

Let’s face it: India and China have had a love-hate relationship for centuries. But in recent years, that love seems to have lost its spark, with China's trade tactics giving India more headaches than heart eyes. Through currency manipulation, state subsidies, and a never-ending flow of cheap products, China has been widening India’s trade deficit while giving Indian industries a slow, painful chokehold. So, what’s really going on? Let’s dive in, with some humor and a few eye-popping numbers along the way.

The Widening Trade Deficit: India's Wallet is Feeling Lighter

India's trade deficit with China has been ballooning since the mid-2000s, and no, it’s not just because of all those Diwali decorations made in China. From FY 2002-24, Chinese imports have grown at a compounded annual growth rate (CAGR) of 19.5%, while India's exports to China have been growing at a snail's pace of just 2.6%. It’s like running a marathon with one leg tied behind your back.

Here’s a quick breakdown:

Year	Chinese Imports CAGR	Indian Exports CAGR
FY 2002-24	19.5%	2.6%

The real kicker? That trade deficit is actually bigger than the official stats say, thanks to some sneaky under-invoicing, mis-invoicing, and good ol' covert imports. If only we could just sweep these numbers under the rug.

Manufacturing’s Mid-Life Crisis: The 'Make-in-India' Blues

Remember the ‘Make-in-India’ campaign that aimed to supercharge domestic manufacturing? Yeah, it’s starting to feel more like a pipe dream. The manufacturing sector’s contribution to GDP has flatlined at around 14-16%, while the original goal was a lofty 25% by FY 2025.

To put this in perspective:

Indicator	Target	Actual (FY 2020)
Share of manufacturing in GDP	25% by FY 2025	14-16%
Decline from FY 2011 (18.4% of GDP)	25% by FY 2025	15.1%

Looks like 'Make-in-India' might need a dose of steroids or at least a better trade policy.

Chinese Covert Imports: The Silent Enemy

If Chinese covert imports were a movie, it’d be a blockbuster spy thriller with a plot full of twists. Goods are coming into India through backdoor channels, with misreported values and quantities that keep authorities guessing. This underground trade is making it tough for local manufacturers to compete. Why manufacture when you can just sell cheap Chinese stuff, right?

The real drama unfolds here:

1. Covert imports: Sneak past customs using mis-invoicing and under-reporting.

2. Cheap products: Continue to flood the market, making domestic production less appealing.

The Paradox of Household Debt and Consumption

Here’s a riddle: Why is household debt going up while consumption is going down? Well, despite easier access to credit, people just aren’t spending like they used to. As of FY 2023, household financial savings have dipped to 5.7% of GDP, thanks to rising debt. So, instead of buying a new TV, many are just paying off the last loan they took for the previous one.

Year	Household Financial Savings (% of GDP)
FY 2023	5.7%

It’s a vicious cycle. With savings being funneled towards paying off debts, consumption is taking a backseat, leaving the economy gasping for growth.

Small Industries and MSMEs: The Big Squeeze

Chinese imports aren’t just hurting big industries; they’re also stomping on the little guy. Handicrafts, silk weaving, and even fireworks are feeling the heat as cheap Chinese products dominate the market. The result? Many local businesses are switching from production to trading Chinese goods, which adds little value to the economy.

In other words, we’re trading jobs and growth for cheaper imports. Not exactly a great deal, right?

Time for a Policy Overhaul: It’s Not Rocket Science

Addressing this economic quagmire is a bit like cleaning up after a rager—it's going to take some time, but it’s doable. What we need are surprise inspections, stricter port checks, and policies that actually incentivize local production. Imagine if we put half as much effort into stopping covert imports as we do into hosting surprise celebrity weddings. We might actually get somewhere.

‘Make-in-India’ Needs a Reality Check

If India wants to reclaim its manufacturing sector and ditch its dependence on Chinese imports, we need a change of pace—and fast. Otherwise, we’ll be left wondering why the ‘Make-in-India’ campaign became more of a ‘Buy-from-China’ reality.

Let’s make ‘Make-in-India’ more than just a catchphrase.