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Isolation of China Begins

With 20 Indian Army personnel dead in Ladakh’s Galwan Valley on Monday night, as the stand-off in Pangong Tso, Galwan Valley, Demchok and Daulat Beg Oldie in eastern Ladakh between Indian and Chinese troops became bloodier, the DoT too moved in, and directed state-owned BSNL and MTNL to exclude Chinese gearmakers from supplying telecom equipment any further.

This will directly impact the MedTech industry, which has major imports of medical equipment coming in from Chinese vendors and so many large and small distributors who market Chinese products in India. The pharma industry too is over-dependent on China for both active pharmaceutical ingredients (APIs) and intermediates called key starting materials (KSM).

One key reason is that it is at least 25-30 per cent cheaper to import from China, than other competing global suppliers. Also, the Chinese banks work in tandem with Chinese equipment makers and extend long-term credit lines too.

Yet, the over-dependence could have a serious impact on availability. This was clearly visible when there was a shortage of Vitamin C and common antibiotics, as manufacturers in China closed operations after the Covid-19 outbreak.

Some steps are being taken to reduce dependence. Under the new plan, the government will incentivize local production.

While the increasing demand for a ban on Chinese goods might make for good optics, the reality is that India is still heavily dependent on that country in a wide range of industries including electronics, mobile devices, auto, pharma, telecom equipment, and fertilizers.

MB Bureau