Why india banned chinese funding
Impact of banning chinese products in india

Why India banned chinese funding?

India announced a new screening policy, stating all investments by entities based in neighbouring countries need to be approved by the Indian government. For any country that shares a land border with India, go through a government approval process for foreign direct investment, even if the investing company is not located in a neighbouring country, it would still be subject to these conditions if its owner is a citizen or resident of such a country. India decided to ban Chinese products after the killing of Indian soldiers in Galway valley by Chinese militants. India banned Chinese apps citing concern for the safety and the sovereignty of Indian cyberspace. 

Pakistan and Bangladesh already faced restrictions, so the only neighbour with significant trade flow is china. To prevent opportunistic takeovers of Indian companies, the Indian Ministry of Commerce tighter restrictions on Chinese investment 

India banned Chinese apps citing concerns around sovereignty and security of the country, so startups are wary about Chinese investments. it also reduces the confidence among Chinese investors to invest in Indian startups. These apps include PugG, Cam-scanner, Tiktok and more..

Impacts of the ban on Chinese products in India

It’s a known fact that the Indian market is a price-sensitive market. Here a company has to keep the lowest price to penetrate the market. Indian consumers are more concerned about the price of the products, not the quality of the products. The Ban of Chinese products helps to boost local manufacturing and enable native companies to make more income and provide employment.

If Chinese products are banned/boycotted in India, it can raise the inflation rate in India because Indian products are costlier as compared to Chinese products. The people of the lower-income groups in India will suffer a lot because they will not be able to purchase costly Indian products. This also affect the manufacturing companies and SME on product procurement. This has a large impact on Indian electronics industry because most of the spares and parts are from china.

Impact on Indian economy

When we look around us, we can see most of the product parts are from China. The contribution of China is much higher than the second-largest exporter countries to India in the product like electrical machinery, equipment, and their parts, nuclear reactors, organic and inorganic chemicals, fertilizers as well as vehicle and their parts and accessories, etc. an 90 percent of specific mobile phone parts are from China. Even as an export market, China is a major partner for India.

India is one of the largest pharma industries in the world, while pharma consignments from china have unofficially been stopped at the port, it will create a shortage of medicine both for domestic and export markets.

Indian mission - Aatma Nirbhar Bharat Abhiyaan

On May 12 honorable prime minister Narendra Modi announced a financial package of Rs 20 lakh crore with the aim of making the country independent against the tough competition in the Global Supply Chain. The package is announced under “Aatma Nirbhar Bharat Abhiyaan” to revive the Indian economy. The financial package announced by the prime minister is equivalent to 10% of Indian GDP.

The borrowing limits of the state Government will be increased from 3% to 5% of cross-state domestic product for the year 2020-21. Collateral free automatic loans of up to Rs 3 lakh crore will be provided to all businesses. Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover will be eligible for such loans and can avail the scheme till October 31. 2020.