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Banning Chinese imports or raising tariffs on them will hurt industry, consumer, say Maruti, Bajaj Auto

Banning Chinese imports or raising tariffs on them will hurt industry, consumer, say Maruti, Bajaj Auto
Even before trouble at the border had surfaced, there was a growing perception that much of the problems of many small and mid-sized Indian firms had to do with indiscriminate imports of Chinese goods. The outbreak of the COVID pandemic prompted the government to throw its weight behind domestic producers, without explicitly calling for a ban on Chinese goods. But the latest tension at the border has further fuelled the anti-China sentiment in the country, and the call for boycotting Chinese goods is getting louder.
But how feasible is it for Indian companies to snap ties with China altogether?
Last week, newly elected Confederation of Indian Industries (CII) President Uday Kotak had said in an interview to CNBC-TV18 that the choice to buy or not to buy Chinese goods was upto the consumer.
And now Maruti Suzuki Chairman RC Bhargava and Bajaj Auto Managing Director Rajiv Bajaj have said in no uncertain terms that a boycott of China will not benefit the Indian consumer or the industry. If anything, it could turn out to be counterproductive.
“Maruti as a company does not need to import from China at all, but our vendors do,” Bhargava said in an interview with CNBC-TV18.
“It is not easy for these vendors to find alternative sources or develop alternative sources; it takes a lot of time. This will take a lot of cost penalty on the side of the vendors which ultimately means a cost penalty to the consumer,” he said.
Rajiv Bajaj said that imports from China helped many companies, including his, to be competitive in the export market.
“So, it might look like we are importing Rs 1000 crore worth of stuff from China, but let us not forget that Bajaj is a company that exports motorcycles and three-wheelers worth about Rs 15,000 crore every year,” he said.
“So, this import makes us competitive and helps us export what we do. When you are a global company, it does not mean that you are just going to sell across the world; you will also source from across the world,” he said.
Bhargava said raising tariffs and thereby increasing prices of products that use Chinese imports would not benefit Indian consumers at all. In a market like US, the higher prices could be passed on to consumers and demand would not be affected.
“In India, affordability is a huge issue and if by importing tariffs we are only raising the cost of the cars, then sales will come down, industrial growth will come down and employment will come down,” he said.
Rajiv Bajaj said that besides commercial considerations, there were ethical issues as well, in abruptly snapping ties with Chinese suppliers.
“We have friends who are suppliers in China, who have invested a lot of time, effort and money in supplying us not a vicious virus but some wonderful wheels, very reliably for years, maybe for the last 15 years if not longer,” Bajaj said.
“How do we suddenly let them down even if we could? Is that ethical, is that what we would like to stand for either as a company or as a country? We have to ask ourselves,” he said.
According to Bhargava the bigger question that we need to ask ourselves is that why should we importing not only from China, but from other countries, in such large quantities over such a long period of time.
“Why has Indian industry not become capable of manufacturing all these components in India, manufacturing it at competitive prices?,” asks Bhargava.
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