ON OCTOBER 30th India celebrates Diwali, the most important festival in the Hindu calendar. Over five days, millions of lamps and candles will be placed on doorsteps and rooftops; prayers will be offered to Lakshmi, the goddess of prosperity; and fireworks will go off in the skies over the streets of nearly every town and village. A festival that celebrates the victory of light over darkness, Diwali has in recent years brightened the mood of Chinese exporters as well: many Indian households favour cheaper, electric decorations made in China over the traditional earthen diyas (pictured).
But this year’s edition could take a dark turn. The country’s noisy social media are cluttered with posts calling for Indians to shun Chinese goods. A fake letter championing the boycott, ostensibly signed Narendra Modi, the prime minister, has gone viral. Politicians from India’s ruling Hindu-nationalist Bharatiya Janata Party (BJP) have endorsed the cause. What is going on?
The economic roots of the boycott are not new. China is India’s largest trading partner, with $71bn worth of goods exchanged between them in the past financial year. But China is also the nation with which India has its largest trade deficit, an imbalance that rose 9% to $53bn in 2015-2016. In contrast, China’s trade surplus with America reached $367bn in 2015. What the deficit is made of matters most. China’s light-industry goods compete directly and with overwhelming success against India’s small industries, the lifeline of its manufacturing sector and a reservoir of jobs. So India exports mostly raw materials to its neighbour. That has the government worried: of the 572 anti-dumping measures India took between 1995 and 2015, 146 were aimed at Chinese-made goods. The “Make in India” campaign, which has been championed by Mr Modi and sees foreign investment as crucial to boosting his country’s manufacturing power, has been careful not to advocate protectionism. Yet in a country where economic boycotts were first popularised as a non-violent strategy to combat British rule, such appeals carry emotional and historical heft. Geopolitics provided the spark for the current call. India has long been trying to get Masood Azhar, the boss of Jaish-e-Mohammad (JeM), a Pakistan-based jihadist group, listed as a terrorist by the United Nations. India suspects JeM of carrying out the January attack on an air-force base in Punjab, which killed eight Indians, including one civilian. JeM is also the alleged perpetrator of last month’s massacre at the Kashmiri garrison of Uri, in which 19 soldiers were killed (though another group claimed responsiblity). Yet twice this year, China used its Security Council veto to block Mr Azhar’s addition to the UN sanctions list. The move underscored Beijing’s all-weather support for the Pakistani establishment, elements of which India suspects of harbouring Mr Azhar. Some Indians don’t understand why they should have to trade with a nation working against their interests. This perception of China was compounded by its decision in June to oppose India’s accession to the Nuclear Suppliers Group, a 48-nation body that governs the global nuclear trade.
Yet calls for a boycott of Chinese-made goods are unlikely to have much effect. Both India and China are members of the World Trade Organisation, which forbids arbitrary bans on foreign goods. India’s commerce minister, Nirmala Sitharaman, recognised as much earlier this month when she said blocking imports was not a feasible option. A BJP leader deleted his tweets, blaming staff for the text; the opposition is silent on the issue. Nor is the wider business community likely to embrace the cause. Traders and industrialists, who have come to rely heavily on Chinese-made merchandise and machinery, form powerful lobbies. Yet with Mr Modi’s government promoting an increasingly assertive brand of nationalism, anger over China’s snubs will not easily go away. Expect further diplomatic fireworks.
Source: The Economist explains: Why some Indians want to boycott Chinese goods | The Economist
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