‘You can say no to certain businesses that have national security concerns, but be selective’. At best an incrementalist budget with no bold steps. China is one of the largest suppliers of cheaper solar panels and battery storage.

We should work towards the settlement on the border and cool all this passion of cutting out Chinese imports, says the Consulting Editor of ET Now.

Is the China story over in India as Gautam Chikermane says so clearly? I just want to say it is not a clear black and white scenario out there. More and more consumers are asking where the product has originated from but it is not necessarily translating into a loss of sale. It may be a hesitation right now and it is still nascent. There are a large number of traders who do not import anything Chinese but there are others who say give us some time. Do you think that the China story is over in India?

I hope not and I do not think that is the case at all. It seems to be because there is a border incident. Tempers flare up and all kinds of passionate things are done. India no doubt needs to send a message to China but the message should not be one where you cut off your nose to spite your own face. So you have to be careful in what are the forms of retaliation. You talk of Atmanirbhar and making India strong. If you want to make India strong, it means that you must have cost cutting everywhere to become competitive. Now if you say I am going to boycott Chinese apps or Chinese kites or candles or clocks, that will not make you a high cost economy and it will not affect your export competitiveness.

But if you are saying I am not going to buy machinery and I am not going to buy intermediate goods and I am not going to buy various other materials from them, then in that case you will lose out to other countries which do. The ASEAN countries have as many grievances when you see what China is doing in the South China sea. Have they declared a ban on Chinese goods? Absolutely not. So we will simply lose competitiveness. We need to be careful and selective. We need to say that we need to import capital goods and intermediate goods as much as possible. If you want to put some checks on consumer goods, that is altogether more acceptable because that would not go into making a high cost economy.

I do hope we do not escalate things with China. There are already attempts to diffuse a particular situation and the troops have withdrawn. At this particular point of time, to go completely ballistic is going to be the wrong direction. This is pathetic. This is not the way you should be going. As I said, there are other countries which have just as much as grievance and they are not going over the top and neither should we. The Swadeshi Jagran Manch people are welcome to ask individual consumers to bear a sacrifice by boycotting. That is fine and that is an individual thing. But at the state level, should we just delink or ban Chinese goods? Certainly not in capital goods and certainly not in technology.

This is not solely an Indian problem and I am talking specifically about finding alternatives to dependence from China. It is a problem that a lot of countries in the world are looking at right now in the wake of COVID-19 and countries are now fearing that China is going to misuse its economic dominance.

The question is are you going to go over the top. For instance, will you allow the Chinese into India in defence production? Perhaps you will not because it is a clear security issue. Is 5G a security issue? With all our software, you should be able to provide safeguards but with current technology if you want to put it off, it is okay. So you can say no to certain national security areas and I have no objection. But as I said, be selective. Remember that China in the 21st century may be like the US in the 20th century, being the country with the largest number of surplus savings to invest with the largest amount of high technology and cheap finance that is available. In the 20th century, people were very afraid of being completely dominated by the US and at the end of it all, the conduct was unjustified. You need to be selective.

So I would simply say go ahead with these limited measures and secondly, grandstanding is fine. Mr Sajjan Jindal said I am going to become self-sufficient in refractories but refractories are not even 1% of the cost of making steel. So fine, if you want to do that kind of grandstanding and it makes you feel good without becoming high cost, it is just fine. All I am saying is, you need to be careful in certain key areas. Now China for instance is a very cheap supplier of electrical equipment. Instead of banning it, put in safeguards. China is one of the largest suppliers of cheaper solar panels and battery storage. Will you do without that if you are going to have an aggressive solar energy programme and you want to bring your own cost down? No, it would be a bad idea to cut them out altogether. There are going to be import duties. I always have reservations about that but it is possible in theory.

Can you and should you separate diplomatic and military confrontations with trade and economic relations? Should you separate them as you seem to suggest or are they inseparable in the real world? Is that not the basic question that it all boils down to?

There is some sense in which they are inseparable. The point is to not overdo it. The point is to have a calibrated response so that you do not go over the top. If there is one problem for that, I have this guarded response. If the problem gets worse, I am able to have a higher response. If it gets even worse, will we have an even higher response and then if we have a settlement, we will bring it down. So it should not be driven by passion. Without doubt there would be a relationship between economic ties and external affairs issues and something as sensitive as our border. So there will be a relationship but play it cool and do it with a cool head. All the reactions should be calibrated not only in the upward direction but in the downward direction. Hopefully we should work towards the settlement on the border and then cool all this passion on cutting out Chinese imports as well.