Recent numbers have shown that trade between India and China has surpassed $100 billion mark. The share of imports is way higher than exports, indicating India’s overdependence on Chinese products such as chemicals, automobiles and electronics.Strategic and economic implications
Supply chain disruptions
Any internal problems in China can result in supply chain disruptions. The dependent sectors in India will be completely in disarray.
Artificial shortage
Source countries can create artificial shortages as part of economic war. This will hamper economic growth and situation can worsen.
Higher trade deficit
The destination country, in this case India, will have to spend its foreign reserves to pay for Chinese imports. This is not fruitful in long run.
Role of PLI scheme in overcoming problem
Local production
The product will be manufactured locally, making it easier to control its production based on demand and supply.
Low cost
The cost of product will reduce significantly as transportation costs will be removed. The end product will also be cheaper as a result of easy availability.
Regular supply
There will not be fears of abrupt stoppage and regular supply can be expected. In addition, revenue can be earned by exporting.
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