New Delhi -°C
Today in New Delhi, India

Jan 28, 2020-Tuesday



Select city

Metro cities - Delhi, Mumbai, Chennai, Kolkata

Other cities - Noida, Gurgaon, Bengaluru, Hyderabad, Bhopal , Chandigarh , Dehradun, Indore, Jaipur, Lucknow, Patna, Ranchi

The tide seems to be turning

Although these are very early days, Indian manufacturing is gaining some competitive advantage over the unrelenting tide of imports from China.

india Updated: May 16, 2012 22:32 IST


Although these are very early days, Indian manufacturing is gaining some competitive advantage over the unrelenting tide of imports from China. Low-end wares from across the Wall like toys, stationery, fabric and lighting fixtures are yielding market share to locally made products. The world’s factory is finding it increasingly difficult to flood overseas markets with cheap goods as wages, prices and the currency of the People’s Republic keep climbing. China is facing slackened demand at home and abroad, its export growth in April almost halved to 4.9% from a month ago and imports grew a mere 0.3% — down from 5.3% in March. Some of the loss of domestic consumption appetite results from Beijing’s efforts to rein in inflation and a housing price bubble, but this presents a glimmer of hope for economies like India’s that had all but given up trying to match its northern neighbour’s frugal engineering.

India’s trade statistics speak for themselves. China’s share of our total imports has been rising inexorably from 9.41% in 2006-07 to 11.76% in 2011-12, over which period the two-way trade doubled from $31 billion to $62 billion. Take oil out of the picture and China’s share of our non-energy imports is significantly higher. And the terms of this trade is lopsided. For every rupee of stuff we send across, the Chinese sell goods worth Rs 2 in India. So even anecdotal evidence that the tide may have turned in some categories of products is heartening. Reports suggest that Chinese companies may have of late lost a third of their share of the Indian toy and compact fluorescent lamp markets and sourcing of fabric for garments is down by a tenth over the past year. Indian firms are sensing big opportunity here for both the domestic market and exports. The rupee’s precipitous fall provides exporters of Indian stationery an extra edge over their Chinese rivals.

Some of India’s newfound gains are to be expected from the relative stage of development it is in vis-à-vis China. We are approaching our industrial revolution — hesitatingly, some would argue — while the Chinese are smack in the middle of theirs. As Chinese production capabilities approach those of advanced economies, Indian firms can pick fruit lower down the technology tree. Emerging from roughly similar economic structures at the end of the 20th century, the two Asian countries can evolve a symbiotic relationship that assists in each other’s development. More Indians will find themselves in factories when the Chinese population begins thinning. That is some way off, and India can play catch-up with a better mix of policy that encourages skill development and technology transfer.