 Hello and let's talk about the campaign to boycott Chinese products. We are in yet another silly season as social media is full of hashtags and appeals to boycott Chinese goods. The ostensible reason for this is the alleged Chinese incursion into Indian territory. But this has become yet another instance of right-wing jingoism with some xenophobia thrown in for good measure. Now self-reliance is a good thing and the government of course has been pushing for Atmanir Bhar Bharat. But a question we need to ask is are we really Atmanir Bhar or self-reliant? Can we be Atmanir Bhar with the policies his government is following? Or is this all just a ruse to distract us from the fact that the number of COVID-19 cases is rising at an alarming level and critics of the government are being persecuted while the courts look on? We will discuss this further but here are some facts first. A recent article in the Mint points out that while India accounts for 3% of China's exports, over 5% of our exports go to China. Trade as we all know is a two-way street, so what do we do about it? We do know that China's raw materials and supplies fuel a lot of small-scale industry in India. This is especially so in the small and medium industry sector. These factories provide many jobs. So do we decide that we want to shut all of them down as well? Does the Indian government or those advocating this boycott have a good solution to provide substitutes for cheap prices? And then there's a question of investment. A recent article from TechRadar points out that a lot of companies that form an essential part of day-to-day life for middle-class India, this includes Paytm, Ola, Flipkart, Swiggy and Zomato, all of these are varying degrees of Chinese investment. So is anyone going to buy them out? With all this, how feasible is this campaign? We talk to journalist Anandio Chakravarti to find out. Thank you Anandio for joining us. So we're going through a bout of what we can call economic patriotism yet again, boycott calls all over social media, a lot of moral righteousness and indignation. But actually, does this whole call for, there are two aspects to it, the second aspect about several lines we can get to later. But this whole notion of boycotting Chinese goods, does it even really make sense economically? Well, you know, the point is that let's say that there is an argument to be made that if imports cause unemployment, imports cause poverty in a country, then obviously there's an argument to be made to push for domestic growth, domestic manufacturing, import substitution. And that was something that the government of India had taken up after independence. And we know that from the mid 80s, and especially after 1991, that was given up. And supposedly we were going to have export led growth, and now we know what exports we actually have done in the last 30 years, everyone knows that, even if it is ignored by the mainstream business media. So there could be an argument to be made that yes, the fact that everything comes from China, a large amount of things come from China makes it difficult for manufacturers to employ people to create jobs, of course, that is, but the question is, can you do that and what is required to do that? Of course, we have signed all these international treaties, but if we are such, you know, we keep hearing from supporters of this government and the government itself that how India's stature has increased worldwide and no one can anymore bully India. If no one can bully India, then surely India can tell them that we don't want cheap Chinese goods to come into India and we are going to impose some tariffs. Now, there's a problem with that Prashant, we know that when you increase import duties, prices are going to go up because if things were coming in cheaper, obviously prices are going to go up and that has a political cost, which no one wants to pay. So the only other way is to actually encourage and incentivize manufacturing in your country to replace what is coming from China and other countries. Also, the other aspect remains, which we discussed earlier while talking about the economic impact of the lockdown that Chinese supplies are actually quite crucial for a lot of small scale industries and especially it's in the manufacturing sector, the electronic sector, especially Chinese raw material is very essential. I mean, drugs, I think a large part of what is called the active pharmaceutical ingredient in many antibiotics come from China. The question is, can they be made? And the point is that many things which come from China are actually also made in India. There's no reason for us to buy them except for the fact that they are cheap. You go to any of these, the poor localities of even Delhi and there are these Sunday markets which sit, I'm sure you've seen them, heard of them and you'll find that even Bindi's and bangles that are being sold there are made in China. We know in Diwali we are flooded with Chinese made crackers. So there is no reason why a Bindi cannot be made in India except that it's cheaper in China and probably they give you many more options which look attractive. So even clothes or batteries, torches, all these things, why should they be coming from China? Toys, all of the toys sold here are made in China because they're cheaper and the reason they're cheaper is because the government of China makes it cheaper. It's not private sector across the world. We know that the private sector actually doesn't make things cheaper. It's the governments which subsidize these private sector companies and these private sector companies then are able to sell things for cheap because the government gave them subsidized land, subsidized electricity. You look at something like Walmart, each and every US state has given them more subsidies than the taxes they've ever paid. So the point is that does India do that? It does it selectively and it threw a system of an old boys' club that you have a connect inside the government and you can get something but otherwise there's no system by which companies it. And again, as we discussed last time, Prashant, that we are not saying that this government has to become socialists because clearly people who voted for this government and a majority voted for this government, the NDA, they were not looking for a socialist government. So let them be a completely capitalist government but let them do something to move manufacturing from that 0.03% growth that we saw last year to something better. And of course, there's also the political aspect of say creating a sense of jingoism, an element of xenophobia that comes into all these calls which is so there is a two-pronged thing. One is that of course you have this so-called Chinese incursions taking place which the government has and government friendly defence analysts have denied and said no such thing has taken place. But you actually do not have the ability to take it on geopolitically. It's much easier to say I'll finish off Pakistan then say I'm going to finish off China. So what do you do? From the sides you create this political system which the government doesn't officially say. Except the government kind of fuels it by saying every Indian should buy things made in India. It's absolutely true that Indians should buy things made in India. Who's stopping Indians from buying things. But as I said that I have a friend who has this wholesale toy business in Old Delhi and he sells toys. These buying agents come from small towns. They buy it and take them. All of this comes from China. This guy used to have a factory. His father had a toy factory. They shut it down because they can't compete. It's as simple as that. They cannot compete with a Chinese product. Chinese unbranded toys look like the branded toys that we get in the more upmarket shops. So he says that I could not compete with them. So I just got into wholesale trade. Why can't they compete with them? Because China supplies cheap electricity. Electricity per unit is much cheaper in China for companies. It has amazing infrastructure. Roads. Ports are closed by cargo airports are closed by the transition time of goods. Inputs are sitting right next door. So if you need let's say coal it's right there. You need a part. It is right there. So these are things that are happening in China. Not only China across the world. That is how manufacturing has been developed. It was developed. That's how we know how the Zhaibatsu and later the Kieretsu in Japan developed with closed cooperation with the government. We know how the Chai Ball. All the Samson's and all these were competing today and taken over the world. How were they? They basically were funded and subsidized and protected by the government. They're government. So in India if you're going to do that there's a two-pronged thing. One is you need to provide a system by a level playing field for. This is by the way what the Bombay Club had said in 1991 when the country was opening up that give us a level playing field. Of course they then saw that finance and all that is going to help them. So they backed liberalization. But today they are many of them are reconsidering that what had happened. Another point that one has to look at is that it's okay to make things in India. Great. But who's buying them? If people don't have money then what's the point of making it? So the reason they buy Chinese goods is because it's so cheap. Even a domestic help or domestic worker can go and buy a mixie made in China and it probably heats up a little bit more than the higher end Chinese goods that you and I also buy. They have come branded with some American brand but made in China. But still the point is that they get mixies, hairdryers everything that they aspire to see buy which they see in the homes where they work. They get them at drug bottom prices. Can't Indian companies supply them? Yes they can. I'll give you an example of someone I know and this person used to work in an electronics company in the 80s and 90s. Now this electronics company they wanted to compete. At that time I think it was the time of Raju Gandhi and he wanted you remember that we are taking India the 21st century and all that kind of computers kind of stuff. Then they said okay we are going to encourage electronics and I remember being in school in the 80s and being told that Japan is so great and Japanese things are so fantastic. Electronics from Japan we heard all about that. So they wanted to set up a factory and state governments competed with each other to get them to set up a factory and state government said that we are going to give you subsidized land very cheap land come. So he went to one of the they went to one of the neighboring states of Delhi to a small town where they were told that this is going to be developed as an industrial area. Here you can here's land at rock bottom price you just set up your factory. So they said okay so what about electricity? They said there's no electricity here but you're free to bring your generator. He said what about water? They said oh there's no water here but why don't you just take a board well just go up and you'll get it. So they said what about roads? He said you're free to build your road up to the factory no one's going to stop you. They said okay thank you very much but they moved on to the next step. The next step said we have a ready made factory for you and not only that we are going to give you an interest-free loan. This is in the late 80s right interest-free loan. So interest-free loan 20 years means that basically it's free money being here. So everyone was excited but you're ready this kind of a subsidy. So they went there and they started working and they realized this is an electronics factory. They realized that voltage fluctuated between 90 to 290 every hour. So first a few machines blew up and then they said okay what we're going to do is we are going to put a large industrial scale voltage stabilizer into the input. That caused them more than setting up a factory in Delhi. So they quickly wound up. I think that it's all very well to say make in India. So it's not that easy. Secondly everyone wants to automate. Now you have to punish that right. Things which where people can do the work which does not need to be done by a machine needs to be done by human beings. And if you say if a company says I'm going to hire 100 more people then I need to give them a tax break. If someone says I'm going to automate double their tax. So there are ways to incentivize companies to hire people. And we keep hearing about labor laws doesn't allow us to hire. This is all complete poppycock because we know that labor wage cost is between 2 to 3 percent in the manufacturing sector. You can sack half the people and you save 1 percent of your total cost. So the real and in any case everyone hires in contact. So the real issues are government policies. Governments need to get in invest. And if the Modi government is serious about this it will do it. But it's shown that it's actually not serious beyond the slogans of Atman Irbar and boycott Chinese products on Twitter. And of course that people who are doing it in the IT cell are probably using Oppo and Xiaomi phones. Thank you so much Arindy for talking to us. Thank you so much. And that's all we have in this episode of Let's Talk. We'll be back on Monday with the latest news developments of the day. Until then keep watching NewsClick.