Made in China swamps Indian PM Modi’s plans as backlash escalates

Bloomberg

In Mohit Gogia’s stationery and gift store in Noida, near India’s capital, the only decorative lights for sale ahead of last month’s festival of lights were Chinese made.
“India-made lights cost twice as much,” said Gogia, as shoppers snapped up supplies for the Diwali celebration. “Customers aren’t willing to pay that.”
Two-way trade statistics tell the tale. India’s deficit with China has ballooned nine-fold over a decade to $49 billion in 2016 as China’s manufacturing edge stacks the odds against Prime Minister Narendra Modi’s three-year-old ‘Make-in-India’ programme.
The result: India’s current account deficit is worsening again, threatening the outlook for an economy already straining under the fallout of a snap ban on high-value notes a year ago and a new sales tax. Now, a century after freedom fighters in colonial India launched a movement against British goods, the backlash against Chinese products is ramping up. Swadeshi Jagran Manch, an economic policy group linked to the ruling Bharatiya Janata Party, drew more than 100,000 onto the streets in the capital New Delhi in a rally against the dominance of Chinese products.
“This is the biggest-ever gathering to fight the dominance of Chinese goods,” Arun Ojha, national convener of Swadeshi Jagran Manch, said. “Our youth are losing jobs and we are becoming traders of Chinese products.”
Swadeshi Jagran Manch says its boycott movement is a “second war of economic independence” and claims support from farmers, trade and labour associations—the same groupings that Modi will rely on for re-election in 2019.
“This flood of Chinese imports fits in very uncomfortably with the priority of the Modi government to expand India’s manufacturing base,” said Harsh Pant, professor of international relations at King’s College in London.
“This trade deficit is now becoming a major headache. Though this is not unique to India-China economic ties, this is a major concern for Indian policy makers now that economic restructuring is a priority for New Delhi.”
In the last 10 years, there’s been a few episodes of rapid growth in India that led to rising external deficits and inflation and came to a halt because the government had to rein in demand in order to restore macroeconomic stability, said Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong.