Can India lure investors from China and survive on fewer imports?

New Delhi is looking to attract electronics manufacturers and wants to boost domestic production of pharmaceuticals

A yawning trade deficit is fanning bilateral tensions, with a minister in the Modi administration saying global ‘hatred’ of China is the ‘biggest opportunity for India’

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Electrical machinery and equipment amount to 30 per cent of India’s imports from China. Photo: AFP

Published: 5:30pm, 29 Apr 2020Updated: 10:24pm, 29 Apr 2020

Just before the Covid-19 pandemic, engineers at Fabrinox Potnis were faced with a dilemma. The Mumbai-based commercial-kitchen-equipment manufacturer was working on a contactless handwashing station, and there were only two suppliers producing a valve that allowed the mechanism to work effectively – one in India, and one in China.

“The cost of the Chinese import was 8 per cent to 10 per cent cheaper and the quality was vastly better,” said director Saurebh Potnis, who decided to go ahead with the company from China. His handwashing station was a hit, but Potnis now needs more supplies – and these are increasingly hard to come by as the coronavirus hits global trade.

Even as India grapples with a steady rise in Covid-19 infections – with more than 31,000 cases so far, and over 1,000 deaths – there is an undercurrent of change in New Delhi. The country is increasingly eyeing the space China might have to cede in global trade, following the realisation that global commodity chains are excessively reliant on Chinese imports.

With Prime Minister Narendra Modi having last week said the biggest lesson all nations could take from Covid-19 was that they had to become self-reliant, the Indian government is going all out in a bid to revive its own economy while scoring a political victory over Beijing.

To accomplish this, Delhi is considering a two-pronged approach. Like some of the world’s largest economies, it wants to lure foreign investors that might seek to exit China, but at the same time it is looking to push domestic manufacturing in a bid to actively reduce the Chinese imports on which some of its industries depend.

India’s Prime Minister Narendra Modi says nations must become self-reliant following the Covid-19 pandemic. Photo: AFP