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Overexposed to Chinese Imports
Oct 21, 2016

Boycotting goods that are made in China has been a topic of heated debate of late. The data in today's chart makes it amply clear that goods produced in China have had ample demand in India over the past decade. As we have written earlier, even things like Ganesha idols and rakhis are imported from this country. As is to be expected, imports from China made up for over 80% of India's total imports from other BRICS countries in 2015. Between 2006 and 2015, China's share of total BRICS imports by India increased from 74.4% to over 80%.

The key reason is India's lack of focus on manufacturing. Simply because manufacturing builds the lower economic class in a society. And if you give up manufacturing, there is huge income inequality to contend with which then gives rise to the total extinction of the lower middle class. So what remains is extreme polarisation.

Well, with the quality and the quantity of population that we have, India should already have been a manufacturing powerhouse. The Make in India campaign hardly gathered steam. And so far, we have totally squandered away the population edge that we have. Things have come to such a pass that items like Ganesha idols and rakhis can't be manufactured competitively despite the low value add involved and abundance of cheap labour. Thus, what has remained is the extreme capital intensive businesses at one end of the spectrum and a huge unorganised and a parallel economy on the other. To be able to reduce dependence on Chinese imports, India would first need to increase its manufacturing competitiveness.

Data Source: Mint

This Chart Of The Day was published in The 5 Minute WrapUp - This Proven Formula Is Predicting Big Returns for Stocks

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