As a wide range of cheap Chinese products flooded the Indian market, some local industries were adversely affected,

while others benefitted by using these products as raw materials. Discuss the advantages and disadvantages of allowing Chinese products into India. Providing trade data, give examples of industries that benefit and those that are affected by Chinese imports. How can the Indian industries that are threatened by cheap Chinese imports deal with the threat?

As we all know, International trade has always been an attractive idea for merchants and businessman since time immemorial. There is always an opportunity to sell more, make more profits, increase the market share, remove seasonality fluctuations of demand and supply, increase in productivity, and of course a business or even a country learns a lot on the product development technologies and strategies from doing business with other countries or regions. Recently China has become the manufacturing hub of the world. Indians are very smart, ambitious, hardworking ppl. And so are the Chinese. But still China hs an upper hand on the Indian Economy. As Indians scale newer heights of consumption, retail shelves are becoming showcases of the competitiveness of Indian manufacturing. It has come into the notice of The India Street that bigger sections of these shelves are getting filled by products from China, particularly in categories such as toys, home decor items, luggage, consumer electronics, appliances, and stationery. If experts are to be believed, almost all organized retailers are reporting a growth in Chinese imports. the Chinese goods have invaded almost all the sectors of Indian market and seem to be bringing tougher times for the Indian Industry. Because of wide availability of cheap and apparently technologically advanced Chinese goods, many economists fear decline of local manufacturing units or the small-scale industry in India. The rise in demand and sudden popularity of Chinese products, which are available at cheaper prices, is giving nightmares to the Indian industry to the extent that they have started sticking Made in China stickers on their products to boost their sales. They are using the big Indian market merely to dump their products and by doing so they are killing the

Indian units. For example last year during Diwali, China made crackers were sold in the Indian market. These crackers reportedly contained Sulphur. Sulphur is more harmful than Nitrate, which is used in India to make crackers. Since the Chinese crackers were cheaper than the Indian crackers, so they managed to attract gullible and largely illiterate Indian lot. As a result the Indian cracker industry saw a decline in the revenue. China is our major competitor in sectors like software, hardware, electronics etc. The small-scale industry (SSI) contributes 35-40 per cent to the total manufacturing in India. So it is the SSI, which suffers most because of Chinese goods. For instance, data reveals that 60 per cent of the industrial units in the industrial belts of Thane and Bhivandi near Mumbai have been closed down. Many small-scale Indian companies have stopped manufacturing their own goods as now they import them from China. Thats why many Indian workers have lost their jobs. This shows that the objective of SSIs of providing employment to the rural youth of India is defeated completely. The ratio of Chinas IT spend to its GDP is nearly 5 times that of Indias. If Indias current growth rate in IT doubles, it would still take us 25 years to catch up with China, and that only if Chinas growth rate remains stagnant. But Some of the Industries r benefited as well for example, a vry imp industrial part used in small scale plastic industries i.e hopper loader. This part is manufactured by Larsen & turbo of a price about 1 lac, but this product is easily available from china in just rs 40000. Another example from the same industry is dat a substance known as high density poly ethane is available as Chinese product at vry cheap prices but wdt a quality certificate. According to Biswajit Dhar, head of World Trade Organization Studies at the Indian Institute for Foreign Trade, "China has consistently enjoyed a favorable trade balance vis-a-vis India, which in 2003-04 was almost 50% higher than the level recorded in the late 1990s. Furthermore, the commodity composition of India-China trade has been such that it is China which, on balance, stands to benefit." India's export basket is largely made up of raw materials and intermediate semi-finished products, mostly iron and steel, and ores. "You could say therefore that China is buying metals and other raw materials from us and selling it back to us after value addition. According to Nathani, when India opened up bilateral trade with China, it reserved the local toy industry for the smaller

manufacturers. "But now visit any toy shop in the country and you will struggle to find anything made in India," said Nathani. On August 28 2009, the Department of Telecommunication (DoT) of India held a meeting with top executives of local telecom companies. DoT officials reportedly asked Indian telecom companies to stop using China-made telecom equipment in sensitive border areas, as the Home Ministry and intelligence agencies are concerned that these equipment could have spyware or malware built into them capable of tracking voice and data traffic from a location outside the country. At the end of July, India's leading industry body Association of Chamber of Commerce and Industry of India (Assocham) asked the government to levy import duty on Chinese power equipment. It said the domestic industry is being hampered by the products from China. Assocham also accused Chinese power equipment producers of offering very low prices under the government subsidies. It said that India imported US$8.3 billion worth of Chinese power equipment in 2008, and therefore asked the government to restrict such imports. Xinhua has learned from local sources that recently, there has been a trend that some Indian government bodies have been raising the tone of "security threat" from Chinese products. While expanding its regulation list from state-run telecom companies like the BSNL to private telecom companies, the Indian government on August 28 organized the meeting of telecom companies, making the issue clear and public There is a school of thought developing in India which believes that the Indian IT industry can convert this apparent Chinese threat into an opportunity. Nasscom president Kiran Karnik is one of the main votaries of this opinion. He believes that while China will always remain a formidable competitor, a policy of engagement rather than a policy of isolated approach would perhaps be a better strategy. First, it would give Indian companies a door to enter the Chinese domestic market which is today dominated by MNCs. Plus, Indian IT companies based in China can address other East Asian markets like Japan and Korea. This view is also endorsed by Noshir Kaka, principal, McKinsey & Co. It is a well established fact today that Indian IT firms have an excellent opportunity waiting to be tapped in the

Chinese domestic market, which is estimated to be four times the size of Indias. Also, with China becoming a part of the WTO, local banks in China will soon be forced to start upgrading their technology. As local players have not been able to provide the required expertise and technology in the domestic IT market, the Chinese market is currently dominated by MNCs. This in itself offers an excellent opportunity for Indian IT firms, whose development expertise is no way inferior to these MNCs. But things are about to change, as China wants to emulate Indias success in the software sector and become a major global force. China has initiated a series of measures, which include plans to set up specialist IT training institutions on the lines of our IITs and Chinese firms are following the same strategy Indias IT majors did (bagging projects based on price) before going on to become software majors. Yet, there is a bigger opportunity for Indian IT players in China. One, according to Infosys chairman N R Narayana Murthy, is that Chinese firms cannot meet the full demand from the Chinese domestic IT industry, resulting in the government allowing foreign firms like Microsoft, Oracle and IBM to operate through joint ventures. In addition, Kaka feels that Indian IT firms can take advantage of the fact that China offers Indian IT firms lower trade barriers, lower taxes and excellent infrastructure. No wonder Infosys is on the threshold of setting up facilities in Shanghai to tap the Chinese domestic market. However, according to R Ramachandran, president and chief operating officer of Bajaj Electricals, India's top electrical-home-appliances company, although that segment has been flooded too with Chinese products, India hasn't really lost much because it has shifted its own manufacturing to China. No Doubt Chinese products are being dumped and being used by Indian people but Indian People r quality concious. For info, Any Indian housewife go for buying a product measure the same in terms of various parameters, and if satisfied then only the buying is affected. The Best Quality at affordable cost is the key to procurement.

Chinese imports have not affected the Indian leather industry. We Export more than 50 percent of leather.. major part is exported to china as well..

Flooding of Chinese products bring certain advantages as well.. the cost of products are low.. Chinese mobile phones enables our urban teen to acquire multi-usable phone.. it gives opportunity to re-engineer certain products.. availability of cheaper raw-materials to industries.. increase in trade increases employment levels.. but on the other hand dere r sm ve aspects as well like- closure of various ssi n psus whch result in social unrest low quality levels and zero customer satisfaction loss of govt revenue.. etc etc..

Nagesh Kumar, director-general of Research and Information System for Developing Countries, feels such benefits are significant. "India has emerged as a leader in software development and other knowledge-based industries but China, on the other hand, has become a major base for IT hardware manufacturing. Mixing India's software capability and China's hardware strength could produce a formidable combination. This could be facilitated by joint ventures among their enterprises, extending production networks to each other. This process is already in motion: China's Huawei Technologies does its chip designs in Bangalore while Indian firms are taking advantage of cheaper hardware manufacturing costs in China by shifting production there." The other important benefit of joint cooperation lies in the area of energy. The booming demand for energy and high dependence on oil and gas have pushed India and China to secure oil equity abroad, where very often the two have to compete for stakes in overseas oil fields. "A strategy based on cooperation will help the two countries secure better terms collectively, besides spreading the risks. The two countries could also invest together in building joint pipelines and share the costs for such infrastructure," said Kumar. India attracts just about $4 billion in foreign direct investment (FDI) against China's $60 billion a year. According to Standard & Poor's, much of that FDI is for projects that are implemented in both countries "but go to China for obvious reasons". It hinted that if China starts investing in India, a fair share of that investment could be redirected toward India. In other words, India could succeed in attracting some of the FDI flowing to China toward its shores. Moreover, to compete with China in the global market, India needs to ramp up its infrastructure significantly. That would need as

much as $150 billion over the next 10 years. Clearly India doesn't have that kind of money and any investment from China in the country's infrastructure would be of immense help. We have a large consumer and industrial market, all thirs0ting for products, with great brands and distribution networks. We have an open economy and mature legal systems. Ours is a transparent society with democratic government and good education and good social systems. Even though the world has just discovered it, our growth story is not new and we are heading to be the world's largest economy sooner or later. It's a good possibility that in the next two or three years, some Indian industries will succumb to competition from imported goods, but large chunk of Indian manufacturers will pull up their socks and compete hard. No one will argue with the fact that organized retail has started a process of discovery for Indian manufacturers. As a matter of fact, they are finding their own strengths. In addition, they are preparing to give a fitting response to imported goods. Chinese products are winning only in categories where Indian industry has failed to provide top quality products at competitive prices. India needs to step up and start promoting India products as a safer alternative to China. All in all, one can safely say that Indian manufacturers will have to shape up; or they will get edged out of their home market in few product categories. Our business has fully developed management processes. Many of our Corporates have gone global and successfully acquired several Big Brands and Companies. The rise of globally competitive Indian Companies like Reliance, Jet Airways, Infosys, Wipro, Ranbaxy, Tata Motors, TCS, Bharati, ICICI tells the story of Indian success.