China is employing deliberate strategies to hinder India’s rapid economic progress, effectively initiating a silent trade war. Under the leadership of Xi Jinping, China has imposed restrictions on the export of crucial goods and machinery to India, disrupting the latter’s industrial and economic operations.
The Global Trade Research Initiative (GTRI) has highlighted the urgency for India to reduce its dependence on Chinese imports and forge stronger trade relationships with nations such as Japan and South Korea. These restrictions on critical supplies are expected to affect multiple sectors in India, potentially driving up production costs and contributing to inflation in the domestic market.
China plays a dominant role as a supplier in key industries, including electronics, solar panels, and electric vehicles (EVs). Its decision to limit exports is already causing delays and disruptions for Indian companies that rely heavily on these imports. Besides there are several other imports from China.
Ajay Srivastava, the founder of GTRI, remarked on the broader implications of these restrictions, calling them a clear sign of escalating geopolitical tensions and a trade war. He expressed hope that these targeted restrictions would be lifted, noting that they would also negatively impact China’s manufacturing and export sectors.
Complicating the situation, India’s traditional ally, Russia, may not be able to provide substantial support. Russia’s growing ties with China, coupled with the challenges posed by the ongoing Ukraine war and Western sanctions, have constrained its ability to assist India effectively. These geopolitical realities have diminished Russia’s capacity for global trade, limiting its potential as a counterweight to China.
To counteract these challenges, GTRI recommends that India should make efforts to diversify its supply chain by strengthening partnerships with Japan and South Korea. Procuring high-quality components for electronics, solar panels, and EVs from these countries could help India reduce its dependence on China and safeguard its economic growth.
While China’s actions aim to disrupt India’s progress, they also pose risks to its economy by affecting its manufacturing and export sectors. By fostering resilient trade partnerships and pursuing self-reliance in key industries, India can mitigate the impact of China’s restrictive policies and maintain its growth trajectory amidst the evolving global landscape.