Modi Government has started working on Trade Imbalance between India-China, to review Electronic and IT imports from China!

It seems Modi Government has decided to take China threat with full rigor. China is a huge Economy with a massive Military force and it uses both the power at its will. The biggest strength of China is the way it uses its massive Manufacturing ability to overpower its opponents.

China’s strategy is very simple, keep devaluating their currency, keep the Labor wages low and make anything everything in bulk. This strategy is paying really well to China as it is successfully able to keep Trade balance hugely in its favor. There are many Asian, African and European Nations which have tremendously negative Trade Imbalance towards China.

Almost the same story is with India as well, and that is something which is used as a force multiplier during any conflict in future. India is importing a huge chunk of its IT and Electronics requirements from China. However it seems Modi Government has decided to turn the tide now.

The government has started a review of the massive import of electronics and information technology products from China due to concerns over security and data leakages.The growing engagement of Chinese companies within India’s burgeoning electronics and IT industry — worth nearly $22 billion has sounded alarm bells within the government, especially as it is felt that much of this can be used to gain unlawful access to critical information about individuals, businesses, and government set-ups.

IT and law minister Ravi Shankar Prasad recently held a top-level meeting to assess the situation with regard to the Chinese engagement in India’s electronics and IT sector. Prasad is understood to have asked ministry officials to make an assessment of India’s vulnerability when it comes to goods from China.

A communication has already been sent to industry players for their feedback and assess their preparedness in protection of data and critical information. The Indian government’s movement towards digitalization of services and trade and the manifold increase in online transactions has also added to security concerns, which have reached the highest echelons of government.

Chinese companies have become a backbone of India’s IT and Electronic Industry’s requirements. This include components for products such as mobile phones, medical equipment, telecom network gear and devices and sensors linked to the Internet of Things (IoT).  Apart from that there is a massive growing concern that these devices transmit, or store, data back into Chinese servers, which could pose a security risk. Also, online transactions using many of these devices and platforms can be tracked back to Chinese servers, which can create security issues for the country at a time of heightened tension on the border.”

India’s large and uneasy trade imbalance with China is another trigger for the exercise. It is felt the government should focus, “and insist”, on faster indigenization to tackle the issue. India had a trade deficit of nearly $52 billion with China last fiscal, and the country is now seeking greater market access in the neighboring country for its products and services.

Modi government is already pushing hard to increase local manufacturing by introducing benefits for manufacturing in India. The “Make in India” policy has been focusing on this aspect, and Prasad has said the government expects the turnover of the digital, communications and IT industry to grow nearly fourfold to $1 trillion by 2022 against $280 billion currently.

Manish Sharma