DRAFT SUBMISSION, SOCIOLOGY

Name: Anagh Kumar Tiwari

Roll No.- 18203

Group No.- 14

Topic: - Indian Market In Relation To Indo-China Stress:Analysing The Impact

Introduction

After the Galwan valley incident tensions simmered at the border between India and China,
which prompted Government of India to ban 59 Chinese apps as a response to this act.
However, there are concerns about the economic fall out of the souring relationship between the
two countries. This is because the economic interdependence of the two neighbours is too deep
to be ignored.

China is India’s biggest trading partner in the world and India also has the largest trade deficit
with China (which means that India imports more than it exports to China). This deficit has
doubled in less than a decade.

Both Countries Response to Galwan Valley Incident

• India’s Response:

• On economic front Citing the “emergent nature of threats” from mobile

applications, including popular ones of Chinese origin such as TikTok, ShareIt,
UCBrowser, and Weibo, the government has banned 59 apps.
• Further, India’s trade deficit with China fell to $48.66 billion in 2019-20 on
account of the decline in imports. The trade deficit stood at $53.56 billion in
2018-19 and $63 billion in 2017-18.
• Foreign Direct Investment (FDI) from China in India has dipped to $163.78
million in 2019-20 from $229 million in 2018-19.
• In April 2020, the Indian government tightened FDI norms coming from the
countries which share land borders with India. Government approval has been
made mandatory.
 • China’s Reaction:
• It has described the app ban action as “a deliberate interference in practical
cooperation” between the two countries. China’s State media has warned of economic
repercussions, such as affecting outbound Chinese investment into India

Implications on markets

• Negative Implications

Chinese products form a critical part of the supply chain for firms in many sectors in India. With
the economy struggling to recover from the pandemic, any potential escalation between the two
nations could escalate operational as well as supply-chain risks. India can look to find
alternatives for Chinese products but such a step would be tedious and expensive.

Key sectors affected would be :

• Pharmaceuticals
• Consumer Durables
• Auto
• Telecom
• Power
• Chemicals and agrochemicals

• Positive Implications

This could be a great opportunity for startups in India to rise up to the occasion and build
products and services for making India more self-dependent. Key infrastructure products allotted
to Chinese firms could also come to Indian firms as a result of this escalation.

Conclusion
India cannot afford to sever all its economic links with the world’s second-largest economy, even
in the digital space. Chinese finance will help in sustaining India’s start-up economy. However,
through Atmanirbhar Bharat Abhiyan, India can try to replace chinese products with domestic
products in the sectors where it is possible. Further, it needs to boost up its economic
relations with other countries.
 References
• https://www.theweek.in/news/biz-tech/2020/06/18/economic-impact-of-india-china-
conflict-why-there-wont-be-just-one-loser.html
• https://www.theweek.in/news/india/2020/06/18/galwan-army-officers-to-continue-talks-
reports-of-china-deploying-more-troops.html