# India-China trade deficit outcome of New Delhi’s unrealised manufacturing ambitions | Geeta's World, Ep 90

An episode of [Geeta's World](https://invisiblenetwork.ai/podcast/1635741757), 16 May 2024, 44 min.

Audio: https://dts.podtrac.com/redirect.mp3/api.spreaker.com/download/episode/60058120/16_may_24_geetas_world_16_may_128.mp3

After a two-year gap, China has regained its position as India’s largest trading partner, surpassing the United States. According to the latest GTRI report, from FY19 to FY24, while trade with the US grew, increasing India's trade surplus, India's exports to China slightly decreased, and Chinese exports to India surged by almost 45%. Does this mean the trade balance heavily favours China, with India facing a trade deficit of over $85 billion? This trade growth persists despite India's trade and investment restrictions on China since the 2020 Galwan clashes. Indian politicians often discuss reducing reliance on Chinese imports and boosting domestic manufacturing. So, why can't India stop trading with China? In this episode of Geeta's World, our host, Anna Priyadarshini, and the foreign affairs editor at India Today, TV Today Network, Geeta Mohan, discuss! Listen in! Produced by Anna Priyadarshini Sound Mix by Sachin Dwivedi

## Transcript

[0:00] This is India Today podcasts. After a two year gap, China has regained
[0:09] its position as India's largest trading partner, surpassing the United States, according to
[0:15] the latest gtr I report. In the last five years, while trade with
[0:19] the US grew, India's exports to China slightly decreased and Chinese exports to India
[0:25] searched by almost forty five percent. So does this mean the trade balance heavily
[0:30] favors China with India facing a trade deficit of over eighty five billion dollar.
[0:36] Absolutely, it always has been because whether we like it or not, and
[0:40] the conversations in every important multilateral forum has been how to create an alternative to
[0:47] China? And this trade growth persists despite India's trade and investment restrictions on China
[0:54] since the twenty twenty Galvant clashes. So why can't India stop trading with China?
[0:59] The while this world is talking about alternative supply chains, they haven't been
[1:03] able to build one unlessen until India becomes the place to go if you don't
[1:08] want to be in China. We will see this happening and China will continue
[1:14] to rule the traded global trading industry for at least sometime, if not a
[1:19] long time. Hello, I'm Anna Predesshani with India Today TV's Foreign Affairs editor
[1:25] Gita Mohan, where with Geta's astute and incisive crasp of world affairs, we
[1:30] delve into all that is urgent and pressing in world politics and comprehend how these
[1:37] developments in other countries could shape India's global ambitions of being a wish for Guru,
[1:42] Let's unravel Geita's World. Hello and welcome. This is the ninetieth episode
[1:48] of Kita's World. I'm like really overwhelmed ten episodes to clinch that one hundred
[1:55] mark, but it just feels like yesterday only we started this podcast feels like
[2:00] only yesterday. But we covered a lot. We've really covered a lot,
[2:05] and we've come a long way, and I hope we have a long way
[2:07] to go if our audience continues to support us and watch us yeah and listen
[2:14] to us. Yeah, And I think there would be many who would be
[2:19] tuning in for the first time. So for them, I'm Anna. I'm
[2:22] the host of this show and with me is Keitha Mohan, and this is
[2:24] the podcast where we discuss everything that pertains to this world of geopolitics. So
[2:30] we are ninety episodes, which mean, like we have covered a lot many
[2:34] issues on this podcast, which we are really proud of because we have covered
[2:38] those topics which often do not pass through the so called you know, mainstream
[2:44] media's screens. So please do check out and listen to this entire episode because
[2:51] trust me, that's going to be really amazing because we are discussing the famous
[2:55] trio India, China and the US. Absolutely. Yeah, so this is
[3:00] extremely important considering I think if anybody would ask Guita, you know, who
[3:06] is India's biggest trading partner, I think most of us would be like us,
[3:10] of course, because we have such a smooth relations with the US,
[3:15] although it's not like very even it's uneven, but you know it's quite uneven,
[3:19] yeah, of course that is. But like China. I mean,
[3:23] the reason we are discussing this is because we had a recent news data from
[3:30] Global Trade Research Initiative which revealed that it's not the US that is our largest
[3:37] trading partner, but is China, which we know is not like an ally,
[3:42] it's a rival. So it's a competitor. Yeah, it's a competitor.
[3:46] But in the neighborhood. We are like, we have a rivalry ficial,
[3:51] especially if you look at foreign policy and how it should play out.
[3:55] We should look at India and China's competitors and not as rival although yes,
[4:00] many would want Indian China to be rivals. We've had moments in our relationship
[4:05] where we were at loggerheads. We've had moments where we and we still do
[4:13] where we look like we're rivals. But if the story is only about rivalry
[4:16] and beating each other yea, rather than taking on the world and beating other
[4:21] markets, then we'll always be looking at this and this is the number we're
[4:25] looking at where the news is that China surpasses the United States of America is
[4:30] India's largest trading partner. But there is more to this. The fact is
[4:35] that there needs to be some introspections thinking on how to not just get ahead,
[4:42] but also get ahead, not just competing with one but competing with the
[4:46] global market. Yeah. Also the fact that because it's the election season and
[4:51] you know, China and Pakistan are the two countries which are like they often
[4:55] dominate our political landscape and we always see, you know, all these political
[5:00] parties and indulging in these discussions. That will limit the Chinese incussions. But
[5:06] clearly the numbers don't lie. And economics and politics also intertwined, which we
[5:13] will you know, look at in this episode. So what exactly do these
[5:16] numbers suggest? It is, you know, trade with China really indispensable for
[5:21] India. These are the things that we'll look at. So starting with the
[5:26] data, it can be a bit tricky, so I'll just lay it down
[5:30] for listeners and viewers. So in twenty twenty one, if we look at
[5:33] it, China was the top trading partner. Then the US took over.
[5:38] And now we're talking about this particular year, this fiscal year, China asad
[5:44] a gap of yea two years has he passed. So this gtr Right report
[5:47] which I mentioned, it reveals that India's bilateral trade with China stood at one
[5:53] hundred and eighteen point four billion dollar and imports increased by three point two four
[5:59] percent and exports rose by eight point seven percent. In contrast, if you
[6:03] see the India US trade, it was one hundred and eighteen point three billion
[6:09] dollars with China it was one hundred and eighteen point four and exports dipped by
[6:15] one point three two percent compared to the previous financial year, and imports also
[6:19] with the US it dipped by twenty percent. Now this is like a data
[6:24] of one year, but to really understand, I think it's also important to
[6:30] factored in the last five years, which means from twenty nineteen to twenty twenty
[6:35] four. So if we see that India's expost to China has remained relatively steady,
[6:43] imports have searched and conversely, trade with the US has exhibited major growth
[6:48] with expots searching by almost for eight percent. Let's try to understand imports import
[6:56] growth on both ends when it comes to the US, when it comes to
[7:00] China, And that's the interesting story. The exports, yeah, have decreased,
[7:06] but the imports have increased increased precisely, so we are taking a lot
[7:11] buying a lot more from China. So there has been a surge on both
[7:15] sides. But it's just that the import from China to India is far greater
[7:20] than the bilateral trade. Yeah, like incoming and outgoing trade with US.
[7:26] Yeah. Like, if you say India's exposed to China in the five years
[7:30] is zero point six percent. China's exports to India is forty four point seven
[7:34] percent, which means that importing a lot of products from China. So if
[7:41] we go by this data GEITA, does it mean this bilateral exchange is heavily
[7:46] stagged in China's favor. Absolutely, It always has been. It always has
[7:51] been because whether we like it or not, And the conversations in every important
[7:57] multilateral forum has been how to create an alternative to China supply chains has become
[8:05] a very important and key conversation in all these you know, major economic blocks,
[8:11] whether it's the G seven or the G twenty, so on and so
[8:16] forth. But at the end of the day, we're looking at what is
[8:20] it that India exports and what is it that India imports. Now, when
[8:26] India exports it, we export raw materials primarily iron or cotton, yarn,
[8:33] you know, hand looms, spices, a lot of food products. But
[8:37] what does it import from China? It imports electronic spare parts for electronic items,
[8:46] spare parts for the automobile sector, basically all technology related stuff, machinery
[8:52] related stuff. According to one of the papers, India important four point two
[8:58] billion birth of telecomm and smartphone parts. And this comes and at a time
[9:03] that there has been I'm in post COVID a lot of conversation with regards to
[9:09] security, and we will be talking about that too, but about whether if
[9:15] Chinese any part that is Chinese in a smartphone or in any of these gadgets,
[9:22] should not be used in certain sensitive areas, particularly in the borders of
[9:28] India. So when we are looking at how technology compromises security, at such
[9:35] a time, we still are dependent because if we stop importing from India or
[9:39] from China, what will happen. Our growth will slow down because we will
[9:45] manufacture less. So why will we manufacture less? We will manufacture less because
[9:48] we'll not be able to produce the products that require certain spare parts which are
[9:54] not made in India as of today. Maybe in future it would be,
[9:56] but as of today not. Then which are the countries that you look to
[10:01] those that are making these products And if you look at those countries, it's
[10:07] primarily China China. So China has surpassed the US very minimally. Yeah,
[10:13] yeah, But because it has surpassed it's news, okay. So it's not
[10:16] a very major difference between trade between Indian and US and trade between India and
[10:22] China. There is, I think Gita. The important factor here is that
[10:28] with the US we have like a trade surplus, and in contrast with China
[10:33] we have a trade deficit if we look at the five years from nineteen to
[10:37] twenty four, So that is important, although you are mentioning that it's a
[10:41] marginal difference if you look at just one year data. So trade deficit.
[10:46] I think you should also explain what exactly is trade deficit and trade surplus for
[10:50] our listeners in the US. So coming from not somebody who you know who's
[10:54] an economist, but it's a very very general term of trade deficit and surplus.
[11:01] When a country imports more than it exports, then you fall deficit in
[11:05] trade. Why because you are taking in more from a country than giving back
[11:11] to the country, which means you owe more money to that country. And
[11:15] trade surplus is when you take less from a country but you're giving more,
[11:18] which means they owe more money to you than your trade surplus. So with
[11:24] US, there's a we have an advantage and with China we have always been
[11:31] at a disadvantage. This is not a story of today. Every conversation,
[11:35] every diplomatic meeting that we've had for years now, whenever the trade component comes
[11:41] in, the conversation is about always how the two sides discussed ways to tackle
[11:50] the imbalance of trade. So there is a great imbalance in trade between the
[11:54] two countries, and it is not new. It has been there for a
[11:58] very, very long time. It has been there because you know, when
[12:01] the two countries started after independence, and you know, both China and in
[12:07] their nascent countries were just finding their feet. Butter and we did see that
[12:16] in the nineties we brought about liberalization, so on and so forth, but
[12:20] China started a little before that in shopping. Around his time, they already
[12:26] had started beginning to change how communist China looks, and from there to open
[12:33] up its markets, to bring in manufacturing, to dealing with countries for their
[12:37] own interest when it suits them and closing up when it doesn't suit them,
[12:43] but ensuring that they are open to business, to manufacturing to markets and providing
[12:50] cheap labor, which allowed so many of those countries to look to China.
[12:56] So they really made you know, uh low forward movement. In nineteen ninety
[13:01] we were ahead of China, right, yes, I mean, I think
[13:07] when we were young nations. If you look at our country's GDP and per
[13:16] capita, all of that. On all markers, India was ahead, but
[13:20] it just took them real concentrated, focused thinking on how to take their country
[13:26] to the next level. Strategic too, because you see you compromising on a
[13:31] few things and yet not on others. You do not want to open your
[13:37] country up to everything Western, but you still want all the businesses coming in.
[13:43] So it was a balancing act and in that China today is where ahead.
[13:48] In fact, China has not just surpassed us in being the largest trading
[13:54] partner for India, China today is actually the largest trading country in the world.
[14:01] Yeah, it is. It is the largest trading country in the world
[14:05] with trading that it has not just with competitors like India, but with rivals
[14:13] like the United States of America. Now that's rivalry, right, yeah,
[14:16] I mean with India also we have a traditional rivalry, but with countries in
[14:22] Southeast Asia, which with whom they have not just competition and rivalry, but
[14:30] real tensions so to be at the border, but real tensions when it comes
[14:33] to territory, and yet they're doing business with them. So you're looking at
[14:41] China doing business with everyone, and those interests are kept separate from what their
[14:46] other values on territory so on, and soft for Australia are. Yeah,
[14:52] I just want to look at this a bit differently here because we are discussing
[14:56] a lot is being said about the rise volume of you know, imports from
[15:01] China and the trade deficit that we discussed, and almost everybody says that,
[15:05] you know, it's a bad thing, But what I feel is that it
[15:09] doesn't tell you the entire picture because imports are you know, actually really crucial
[15:15] for India to be able, like you mentioned, also to be able to
[15:18] expot right. For example, like you mentioned, if you are manufacturing a
[15:22] cell phone, some parts that are supposed to go into that cell phone would
[15:26] come from China. All of that would be assembled and then exported, So
[15:31] importing these raw materials is really crucial for it to be able to export.
[15:35] This means that you can never completely do away with imports from a country like
[15:41] China because in today's day and age, the supply chains of most forms,
[15:46] they are globally distributed, and these interconnections are really crucial also for your you
[15:52] know, Apple and Samsung to make a lot of profit and then continue with
[15:56] the manufacturing process. So you I mean this image it you know, knee
[16:00] jerk reaction to this kind of news of India having a huge trade deficit,
[16:06] which is like, like you say, it's not the first time, it's
[16:08] it's always been there. You've always been there. I mean always meaning it's
[16:11] been there for a very long yeah. Yeah. So this knee jerk reaction
[16:17] with China would be to increase the import duties on Chinese imports. But then
[16:22] again, if we do that, you're only going to harm your own Indian
[16:26] manufacturers who rely on imports of you know, these cheap Chinese goods to manufacture
[16:32] you know, globally competitive stuff and ultimately contribute to India's exports. So I
[16:37] want to understand that, you know, this is the this is the tragedy
[16:41] of our times. Like and I also feel that good economics has never been
[16:45] good politics in India, no, Like if you see NOAE in the BJP
[16:49] will try to explain this trade deficit with China this way, and the opposition
[16:55] is also going to pick this up on this figure in the election rallies and
[16:59] they'll be like Modi primeatester Morey are sold off India to China and so on
[17:03] and so forth, but no one will talk about what we need to do
[17:07] to create the right climate here in India so that ultimately our manufacturers can start
[17:14] manufacturing components which we are importing from China. Right. See, that's the
[17:18] whole thing when you said that, you know, we do need China and
[17:22] the indispensability of China in our manufacturing sector. The fact is that that's exactly
[17:29] what the conversation is across the world, that we need an alternative supply chain.
[17:34] And where did this conversation become bigger than it used to be earlier is
[17:38] after COVID. Once COVID hit, the world wanted to take on China and
[17:45] yet could not because everything, all your medical equipments were coming from China.
[17:52] So they realized that you need alternatives. You need alternatives to be able to
[17:56] take on a country, take a hard with the country that is not you
[18:02] know that certainly is not going along with other countries with other countries and is
[18:07] finding a path way more adverse in nature than the said countries. So you
[18:15] do require alternative supply chain. And that's where I say it's not like you
[18:22] forever need China. You might forever need China, if you never look within
[18:27] to make those changes. I'm saying, if you've had this conversation for a
[18:33] few years, now, what is it that you have done? Where is
[18:37] the manufacturing Where are the manufacturing hubs? Because there's a lot of conversation now
[18:42] it's not just this. A lot of it has to do with smartphones,
[18:48] so on and so forth. The microchip industry has to do with security.
[18:52] But then when they actually had to shift from China and they thought fox corn
[19:00] exactly, I thought they would be coming to India and finally didn't and went
[19:04] ahead and set base in the United States of America. So we need to
[19:08] find a way where there is confidence in investors to come to India for us
[19:15] to become a manufacturing hub. You know, there are concerns what happens when
[19:19] a business house, a big business houses looking to a country or looking at
[19:26] a country to invest, they send their teams they see ease of doing business?
[19:32] Is India very easy to do business in? Might have improved quite a
[19:36] lot from the past, but we still not a one window system as was
[19:41] promised. Prim Miister Morey spoke about it quite a bit. But even now,
[19:44] the checks and balances rules regulations clearances. They do take time and it's
[19:48] not a one window system completely. In some cases it might be I wouldn't
[19:53] be aware, but for all others then you need clearances on making that manufacturing
[20:02] plant right. What happens there. You in India face biggest problems in land
[20:10] acquisition. Not that one should acquire land forcefully from farmers, but it's a
[20:15] time consuming process land acquisition and the negotiations, the pulls and pushes are a
[20:22] lot. Thirdly, when you look at them, you look to set up
[20:27] a plant somewhere, what do you assess that area for? You assess it
[20:33] for the logistics. Will trucks be able to ply on the roads or not?
[20:37] Now we do know that, you know, the government is said that
[20:41] they've built quite a few roads, but we're still a long way off.
[20:44] Also, the calculation of roads has changed quite a bit in how it used
[20:48] to be calculated earlier to how it is calculated now, irrespective if a road
[20:53] is reaching or not, if there's infrastructure. If you're looking at food products,
[20:57] are there cold storages? If you're looking at electronics, the requirements of
[21:04] logistics, how fast can it be? How smooth can it be? They'll
[21:10] have to import a lot of the raw material. How does that work for
[21:14] India? A lot of things see trade with the United States of America also,
[21:18] and why do you think an FTA is becoming We are trying to get
[21:22] an ft with a lot of countries that they say, don't be this protectionist,
[21:26] open up a little. But India says, if you open up to
[21:29] these businesses, then our small and middle sector will be really adversely impacted.
[21:34] So we have to walk up very India has to walk a very thin line.
[21:38] But in that also there has to be some forward movement and some focused
[21:44] forward movement on supply chains. It cannot just be talk. They have to
[21:48] start walking the talk. And China does it with a sense of purpose and
[21:55] determination like none other. When they say they want this done, it gets
[22:00] done. Over here there are hurdles, but today the West for the West,
[22:07] if there is a country that has the space, the skill, labor,
[22:11] the brains to really make it, it would be India. So I
[22:15] am looking at why are we not there yet to say okay, we can
[22:21] become an alternative. Yes, I think like you said, of course,
[22:26] there are multiple things that you said, like walking the talk, you know,
[22:29] ease of doing business. But don't you think these are becoming like quite
[22:33] bogus in terms of the political narratives that are being set in India right now.
[22:38] Considering if you see not long ago Prime Minister Modi, he you know,
[22:44] he discussed reducing this depth dependency for strategic and economic reasons on China.
[22:52] We had this entire conversation about India aiming to reduce reliance on Chinese imports and
[22:57] promote domestic manufacturing, the Make in India campaign, the entire fuss about you
[23:03] know, India making it harder for Chinese businesses to operate there. We banned
[23:10] Chinese apps, we imposed import tariffs, we created uh, you know,
[23:15] bureaucratic hurdles. Then India also encouraged local production of goods that were previously imposed
[23:22] imported from China. For example, India incentivized companies to manufacture pharmaceutical ingredients domestically
[23:29] and support local electronics assembly like iPhones here in India. And this also led
[23:36] some Chinese companies to leave India, while others were just trying to adjust by
[23:41] localizing their production to you know, or like forming partnerships with Indian companies.
[23:45] But then we are again here right we had all these steps we had like,
[23:51] Okay, now we're going all all the way, we are all out
[23:53] against China. But here we are and we are again saying that we have
[23:57] to walk the trough. So there is one place where there's a lot of
[24:03] conversations, narrative building also maybe ideas and how to move forward. There is
[24:07] another where we've actually done it or not. I think we are yet to
[24:12] achieve that second phase of actually have we done it or not? And there
[24:17] is a dire need. There are a lot of compulsions global economy, the
[24:22] economic slow down, constraints when it comes to the conflicts that have taken place
[24:29] on and so forth. But for India, I think this is war certainly,
[24:33] but is an opportunity and we need to capitalize and capture it right now
[24:41] otherwise it'll be too late. See what is geopolitics strategic policy is all about.
[24:48] It's all about that opportunity of the window of opportunity right now with everyone
[24:52] opposed to China, with US and China, I mean just a little while
[24:57] ago, with US and China, know not, I mean I'm treating each
[25:03] other's rivals and the United States of America almost sanctioning a lot of the Chinese
[25:11] and the Russia Ukraine War, leading to China support to Russia, further widening
[25:17] that rift. And that gap was an opportunity for India because India was placed
[25:22] well where everybody's listening or was listening to India. But if you don't use
[25:26] that gap to say, Okay, this is what we want, this is
[25:30] what we need to get done, so that people start our countries start looking
[25:33] to us, looking at India, then what happened or what's happening now?
[25:38] There will be a moment, because there always is. Diplomacy is all about
[25:42] going, you know, around his circle. There are good times, there
[25:48] are bad times. There are ebbs and flows in a in a relationship,
[25:52] and so what is happening over here? We're now looking at us engaging China,
[25:59] the trade reps it gone. Yeah, they're restarting conversations, they're looking
[26:03] at They've become very careful with their statements in China, saying that well,
[26:07] we can't ignore in fact, even in India from COVID days where we used
[26:11] to say boycott this, and we've stopped that and we've stopped this to now
[26:15] if you hear external fast means to doctor Jeshanker. He himself has said,
[26:19] well, the reality is that they are competitors, but they are indispensable for
[26:25] now, and that's why we need to continue importing from them. So I
[26:27] think that window opportunity should not be lost where you need to look at how
[26:33] you can become a manufacturing hub for now. We've heard a lot of talk.
[26:37] We've only seen some investments, but we've not seen India transform into a
[26:41] manufacturing hub of course, and I mean far from it. Yeah, and
[26:44] show me their plants. They're not hidden in a bunker. So a lot
[26:48] of people say, oh, no, a lot is happening. You know,
[26:49] it's man, I'm like, manufacturing plants are not made in bunkers that
[26:55] suddenly you'll open and you'll find, oh, India as a manufacturing hub.
[26:59] No, you see it with your naked eyes. You can see the growth
[27:03] of India with the manufacturing hubs that have come up or not right, manufacturing
[27:08] plants that have come up or not making India a manufacturing hub or now,
[27:14] I think somewhere we need to start focusing on that front. Yeah, precisely.
[27:18] And also let's also factor in this, uh, this fact that while
[27:22] the trade with China is not limiting here we are China still has not appointed
[27:29] an ambassador to Delhi in over sixteen months, the longest period thus far the
[27:33] two countries. We have also not resumed direct flights between US. The increase
[27:40] in trade comes despite the other restrictions on trade and investment placed by India since
[27:45] twenty twenty in the wake of Galwang clashes and the killing of soldiers. So
[27:52] like, while we are discussing all these these these are the true facts,
[27:55] I think we should not you know, forget you know, either just one
[28:00] thing, because we have discussed India and China, of course, but let's
[28:06] also focus on India and US's relations a bit in the sense that we've talked
[28:11] about economics, right, But I also want to look at it a bit
[28:15] geopolitically, in the sense that we know the real test you know, it
[28:19] is in financial terms, because when relations between countries pan out, I think
[28:25] financial relations between countries are also equally important. Like you said also that Russia
[28:32] is very much crucial to India. So in the entire Russia Ukraine ward,
[28:37] we did not stop importing oil from Russia. So that is like a testament
[28:41] to friendship, right, And that also enhances the geopolitical relations between the two
[28:45] countries. Coming to India, US is relations. Like we said in the
[28:49] beginning, also it's not even it's uneven. And recently, also a flurry
[28:55] of things have happened, like, for example, the entire xenophobic comment that
[29:00] mister Biden uh you know, spoke of India uh equating it with Japan.
[29:06] So and of course partnering with India for the US is extremely important because of
[29:12] the rival China. Then there was this state visit to the US which you
[29:18] covered, that was an important spectacle. So they're like a bit more like
[29:22] you know, there are high points, there are low points. But what
[29:26] I read that there are several observers who have remarked that the India US relations
[29:30] they are considerably more fragile than they might appear. They said that the two
[29:34] countries they continue to experience friction in several areas which if they are left unaddressed,
[29:41] could ultimately undermine or derail, you know, future cooperation, like I
[29:48] said, xenophobic or probably meddling into internal affairs, or probably if you speak
[29:53] about the entire CA protests. So US has been vocal about how Indians are
[30:00] functioning or the episode or the nature killing, and also the Chabahar report,
[30:08] the recent deal that has happened. So I'm what I'm coming at is that
[30:14] do you think that these fragile relations where there is an undercurrent of hypocrisy as
[30:19] well? Right, it's not like t for tad, it's not like on
[30:22] the face, you know, So I get it, yeah, completely completely,
[30:26] So that's what I'm asking. So you think that India worries that,
[30:30] you know, the US could actually be an unreliable partner in the future.
[30:33] So that is why it's not relying much more freely now because they're anticipating that
[30:40] something could go wrong, and that's why they're treading. If anything, there
[30:41] is a trust issue with China because every time Moodi and Xijian being have met,
[30:47] they've ended up happing, having having a friction at the bottle every single
[30:52] time. So every time there is hug plomacy and the hugging and all of
[30:56] that, you end up having friction at the bottle with US. That's not
[31:00] the case. There was, however, a time when any issue to do
[31:06] with human rights or you know, factors that are outside the realm of hardcore
[31:11] engagement on bilateral relations to do with economics on the economic front would impact the
[31:21] economic cooperation between the two countries. In the past, now what used to
[31:23] happen was that they'd say, but you know, we want you to do
[31:26] this on this, this, on this, this, on this right no
[31:30] longer the case. You have to give it to how India has grown.
[31:33] Now they want a steady relationship within the irrespective of what's happening. I give
[31:40] an example that when the protests happened CAA n RC, they are mindful that
[31:45] they are a country that values democracy and you know, is the country that
[31:52] tells the world the right from wrong and so on and so forth. Right,
[31:56] so they do say it, but they also say where but it's an
[32:00] internal matter of India and they can best decide how to deal with the situation.
[32:07] However, we would only say that our countries and allies and partners should
[32:10] respect and honor rights of all or things like that. But they would now
[32:17] they try to ensure that it does not impact relations also because India is a
[32:22] huge market for China. Also, India is a huge market. If India
[32:27] says we will not import such and such, they were affected. They were
[32:30] impacted that we banned this, We banned Huawei, we banned. They were
[32:36] impacted, but slowly, steadily we're seeing that in the the spare parts or
[32:45] parts for any of these technology, technological or technology related gadgets and the automobile
[32:52] sector, there's still an indispensable force with the US. US would want greater
[33:00] economic relations with India and wants an FTA, sore and so forth. Is
[33:04] because they are the ones who are at a disadvantage when it comes to balance
[33:07] or imbalance of trade with China. It's the other way around. They're sending
[33:14] stuff because India for them is a market, and then the importing less is
[33:17] because they further are major exporters to other parts of the world, So why
[33:22] would they import, which means they're manufacturing capacity is any way way more than
[33:30] what the country requires. So if they're making cars, if it's getting consumed,
[33:36] it's getting consumed within the country and the rest is anyway going out.
[33:38] In India, you're making cars, you've imported spare parts from China. You're
[33:44] making cars. If you're an exporter, you'll export some or else it gets
[33:47] consumed within. So what has China found. China's found a market for spare
[33:52] parts and indirectly, it's a market for the cars that have been sold in
[33:58] India with spare parts that are from China. Right, So for them,
[34:02] India is a huge market. They would not want to lose it. And
[34:06] therefore, every time India came out after COVID and said that you know,
[34:08] we're banning this, they were actually concerned. They were actually worried. They
[34:14] thought how much of this arm twisting will be able to suffer? Only to
[34:19] realize that while this world is talking about alternative supply chains, they haven't been
[34:25] able to build one. Vietnam Philippines are countries that are coming that are looking,
[34:31] as you know, alternatives to many Many of the important phone companies from
[34:39] Taiwan, microchip industry from Taiwan are moving and those who are in Apple that
[34:47] moved from China went to Vietnam. So there are companies that are actually looking
[34:52] at leaving China and looking at Southeast Asia. So unless and until India become
[35:00] the place to go if you don't want to be in China, right,
[35:05] we will see this happening. Yeah, and China will continue to rule the
[35:10] trade, global trading industry, so to say, or supply chain industry for
[35:16] at least sometime, if not a long time. Also, Gita, I
[35:21] think you mentioned earlier about making I mean how easy it is to set up
[35:25] a business in India, and regarding the xenophobic comment, I'm just linking the
[35:30] tour right here, so you know, to expand on the xenophobic comment.
[35:35] This was quite surprising in the sense that considering the good relations that India and
[35:38] the US enjoy, yet when you say xenophobic, it means that you're being
[35:44] you know, as being suspicious of outsiders. One can say that India,
[35:49] despite the improvements in the ease of doing business, is a notoriously hard place
[35:53] that you explain, to set up business in. We still have to attract
[35:57] a lot of you know, global manufactures for whom India is not a natural
[36:01] choice. They would rather go to Bangladesh or Vietnam or Mexico. And we
[36:07] also apply to sort of place very high import duties, but that hasn't helped,
[36:14] as our exposed have declined in the latest point you make, right,
[36:17] So this kind of protectionism is good politics, but it's certainly not good economics.
[36:25] Like I said earlier, you have to let your manufacturers import the raw
[36:30] materials for their finished goods at the lowest possible cost. So by putting these
[36:36] import duties in place, we are not helping Indian manufacturing. And most observers
[36:40] they have been surprised that this is coming from Prime Minister Modi who talked a
[36:45] lot of about you know, ease of doing business and minimum government, maximum
[36:50] governance. So what do you make of this return to protectionism. So it's
[36:57] not a return to protectionism, it's a continuous or of protectionism. It's not
[37:01] like we ever ever got rid of important duties. But if you to compete
[37:07] with countries like Vietnam, Singapore, Malaysia who have done away with these duties,
[37:14] obviously companies would not like to pay more to get this stuff to a
[37:19] country where they have their manufacturing plant. Now over here there is India is
[37:27] a country with a massive population that is not economically you know quite well to
[37:36] do in that you need to protect their interests. There are small industries,
[37:40] medium industries. They will completely shut down should you allow anyone to come in
[37:45] competitive prices, which is why India was always a little protectionist. But now
[37:51] you have to look at it also compare and do an economic analysis. Now
[37:55] we are not the people to tell how these economics would work. But yes,
[38:01] to see whether if this is better than providing jobs to a lot many
[38:08] people if manufacturing comes in, or is it better to have these smaller and
[38:14] middle income sector thriving, with smaller businesses thriving, and have the foreign companies
[38:23] not really come in because of the importantties here. You have drawth in line
[38:28] and say okay, or assess on the government and the country has to assess
[38:31] whether if they want people to come in and how best to bring them in.
[38:37] Is there a middle path that they can find where your own indigenous industries
[38:43] do not shut and yet you're able to find manufacturing coming in for more job
[38:51] creation, So there has to be It cannot be protectionists anymore. However,
[38:55] I don't think India can be called xenophobic. It's not xenophobic. It certainly
[39:01] could be protectionist, but it's not out of fear or dislike that we're not
[39:08] calling people in. It's out of the concern that there could be a massive
[39:13] backlash should these companies come. There could be a massive backlash, whether if
[39:19] it is land acquisition, whether if it is you know, routing the small
[39:27] and mid sector out. So there's going to be there's a lot of politics
[39:30] involved. Also. Remember it's not like China where they're thinking twenty years ahead
[39:37] because they're not technically not being faced with election every five years. But if
[39:44] you're doing it every five years, Whilst you want to think of your country,
[39:47] you also want to think of how to return to power. Now if
[39:51] there's a massive backlash, how will that impact the government and will the government
[39:55] fall? If the government falls, the next government will know that, oh
[40:00] we need to get because the next the opposition would have rallied behind this point
[40:05] and come to power. What are they going to do. They're going to
[40:07] get rid of this and say, oh, we're not going to do this
[40:08] anymore. You're back to protectionism and the person who dared to take the risk
[40:14] has lost. So there's a lot of politics involved to in these decisions.
[40:19] They have to take the risk, have to be bold and yet be kind.
[40:24] A government that does not show kindness to its people, especially the downtrodden,
[40:31] I might have a long life for a small life, but I'd say
[40:35] it better that they have a smaller life because it's important for a country as
[40:42] large as India, with people not so well off and with people who are
[40:47] yet to they have aspirations and yet they're yet to achieve it. You need
[40:52] to be a firm but a kind government. Yeah right. I think that
[40:57] very much sums up the entire conversation that we've had, and a lot of
[41:00] reflecting as well. So what I'm saying is that amid all these political narratives
[41:05] that we're seeing that okay, if we come to part of were in power
[41:07] will limit China's dependence, I mean India's dependency on China. That is not
[41:13] going to happen in the future. Yeah, unless we take some like really
[41:17] stringent and you know, be bold enough to actually walk the talk, right,
[41:22] Yes, yeah, So we'll put an end to the conversation. Gaita,
[41:24] Thank you so much. It was a mini economics class for men.
[41:30] Economics class A class. It has more to do with the politics of economics,
[41:36] because we cannot claim to be economists. I'm sure you know, there'd
[41:40] be a lot of people who'd say, oh, well, she didn't say
[41:43] this, she didn't say that. Forgive us if we've gotten a few things
[41:45] wrong. We'd welcome your comments and corrections. But what we're trying to discuss
[41:52] over here is the politics of the economics, right, here and the conversation,
[41:59] and I should end with this that whilst we are reporting how China has
[42:04] yet again surpassed United States of America is the largest trading partner in these conversations,
[42:09] and I also said that China is one of the largest or is the
[42:14] largest trading trading country in the world. And guess who's US's largest trading partner
[42:20] or who's you're China's largest trading partner. Is the two countries countries with each
[42:24] other. So you know, China can be the largest trading partner of many
[42:30] countries, but who's China's largest trading partner? So you know, rivalry and
[42:36] rivals aside. At the end of the day, economics matters, and capitalist
[42:42] nations like the United States of America and those that have managed to have their
[42:46] communism and yet be capitalistic are thinking business and business interests. Yeah, yeah,
[42:53] lovely. I think it's really well explained. Like you said, we're
[42:58] not economists, but really understand that politics of economics. It's really interesting because
[43:02] I was not taught until now from you. Yeah, so, thank you
[43:08] so much, and to all the listeners and viewers, if you stay till
[43:12] the very end, and if you have any inputs to share with us.
[43:15] Do share in the number is eight five, double eight nine, double six
[43:19] double nne six or you could also email us which is pots at the rate
[43:23] in day dot com. Thank you

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.