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Explained: Chinese money in Indian economy

Jun 20, 2020 13:36 IST

India is now trying to retaliate against China owing to rising tensions on the Ladakh border by boycotting Chinese apps and products, raising tariff barriers and restricting trade investments. But we need to assess how entrenched Chinese trade investments are in India, and can we truly boycott China or hurt them economically? Amit Bhandari, Fellow, Energy and Environment Studies Programme, Gateway House, says that China (including mainland China, Hong Kong and Taiwan) accounts for $ 8 billion in FDI in India, which is not significant when we compare overall size of India's FDI stock. Some Chinese investments also come in from Singapore. Apart from these, Chinese investments in India are high in the Indian start up sector, electric vehicles and automobiles segment. If we decide to go big on electric automobiles, we will end up playing back into the Chinese game. Manoj Kewalramani, Research Fellow-China Studies, The Takshashila Institution, says Indo-Chinese trade is composite. Last year, our trade amounted $ 90 billion. Even after that, it is not the kind of trade dependency that USA has with China. We can impose higher tariff barriers, but we import capital goods and ultimately, the cost will be borne by the consumers. Will those tariffs will change anything on the Indian border? We don't know that but it will end up impacting the end consumer who is Indian a lot more. Watch BOOM's Govindraj Ethiraj interview Amit Bhandari and Manoj Kewalramani on what happens to Indians and Indian economy if we boycott Chinese goods and products.