Rising Chinese Imports Threaten Indian MSMEs

Increasing imports of Chinese goods are significantly impacting Indian MSMEs, leading to struggles for survival and economic challenges. The Global Trade Research Initiative's report highlights the trade deficit between India and China, urging investments in deep manufacturing to protect domestic businesses and maintain economic independence.

Increased imports of goods such as umbrellas, toys, fabrics, and musical instruments from China are severely damaging Indian MSMEs, as many of these products are also produced domestically, according to think tank GTRI.

The report revealed that between January and June 2024, India exported goods worth only USD 8.5 billion, while imports stood at USD 50.4 billion, leading to a staggering trade deficit of USD 41.9 billion.

This imbalance makes China India's largest trade deficit partner. 'China accounts for 29.8% of India's industrial goods imports. India must invest in deep manufacturing to reduce dependence on critical industrial imports from China,' said Global Trade Research Initiative (GTRI) Founder Ajay Srivastava.

Srivastava emphasized that these imports are 'hurting' Indian MSMEs, as the influx of cheaper Chinese goods makes it challenging for local businesses to survive. 'Some MSMEs have to shut down or reduce operations, struggling to grow due to low-cost Chinese products. These challenges impact job creation and economic growth in India,' he added.

The GTRI data analysis showed China supplies 95.8% of India's umbrellas and sun umbrellas (USD 31 million) and 91.9% of artificial flowers and human hair articles (USD 14 million). Similarly, in sectors like glassware (USD 521.7 million, 59.7%), leather articles including saddlery and handbags (USD 120.9 million, 54.3%), and toys (USD 120.2 million, 52.5%), the dominance of Chinese imports is severely impacting domestic manufacturers.

Even in ceramic products (USD 232.4 million, 51.4%) and musical instruments (USD 15.7 million, 51.2%), where Indian artisans once excelled, Chinese imports are displacing local production. Indian MSMEs are also struggling in industries such as furniture, bedding, lamps, and cutlery, traditionally strong sectors now losing ground to Chinese goods. Products like articles of stone and carpets are also threatened, diminishing the competitiveness of local producers.

The GTRI's data indicated that silk imports from China stood at USD 32.8 million, 41% of India's total silk imports during January-June 2024. Srivastava stressed the need for urgent investment in deep manufacturing to reduce reliance on critical industrial imports from China. 'Heavy reliance on Chinese imports is eroding the market share and survival of Indian MSMEs. Strengthening domestic manufacturing is essential to protect these small businesses and maintain India's economic independence,' he concluded.

(With inputs from agencies.)