Boycott China comes with a cost, say MSMEs

Imposing tariffs on imports will increase cost of products delaying economic revival

Published: 21st June 2020 08:21 AM  |   Last Updated: 21st June 2020 08:21 AM   |  A+A-

Youth Congress activists smash Chinese products on a banner that reads 'Boycott Made In China' during a protest over the killing of 20 Indian Army soldiers in Ladakh's Galwan Valley by the Chinese People's Liberation Army PLA troops in Kolkata. (Photo | PTI)

By Express News Service

NEW DELHI: Amid the nationwide call for boycott of Chinese products, micro, small and medium enterprises (MSMEs) say the move may increase the cost of many products by 40 per cent, delaying economic recovery. Industry bodies such as Federation of Indian Micro and Small & Medium Enterprises (FISME), SME Chamber of India and All India Manufacturers Organisation (AIMO) have suggested that the gover nment should think of a long term plan to shift dependency on China for imports and advised not to take decisions simply based on public sentiment.

“This is a serious matter and have to be done rationally and smartly with a proper strategy, else many products on which we are exports dependent, the cost will immediately shoot up as we do not have an immediate alternative plan,” FISME President Animesh Saxena said, adding that India must make domestic market competitive. Small industries have for long been seeking steps to reduce over dependence on China. “Currently Chinese products dominate market on many segments such as toys, and electronics.

Our domestic toy making industry, for instance, is slowly destroyed and over 80 per cent items today are imported and 75 per cent are from China,” said Ramesh Gupta, a wholesaler from Jhandewala. He adds that it is not that India cannot manufacture those products, but they cannot compete with them in terms of price, giving them a major cost advantage. For the pharma sector, too, India imports two-thirds of its active pharmaceutical ingredients (APIs), or key ingredients of drugs, from China.

When supply from China was disrupted during the nationwide lockdown, the cost for many basic drugs rose by 40 per cent. Businesses also added that this is a time when India can rejig its model and can emerge as a manufacturing hub. Finance Minister Nirmala sitharaman had already announced a host of measures to support small industry.

Grappling with several One of the biggest initiatives was to change the definition of MSMEs which now includes a greater number of firms within the formal classification of MSMEs. This is likely to help in the transition of their ‘mindset’. They are now aiming to grow higher without the fear of losing out on the benefits given to MSMEs.


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