NEW DELHI -- India is witnessing a rise in anti-China sentiment, which could impact sales of cheap Chinese products that have flooded the country in the run-up to the Oct. 30 Diwali festival.
Diwali, also called the festival of lights, is the biggest celebration in Hindu-majority India and brings with it an increase in shopping and the exchange of gifts. Low-cost Chinese products such as firecrackers, lighting, electrical fittings, decorative materials, toys and crockery are being sold across the country as the festival approaches.
However, this festive season passionate appeals for a boycott of Chinese goods are being made both in social media and offline in the wake of China's enduring support for Pakistan. Tension between India and its northwest neighbor have escalated after an attack on one of its army bases on Sept. 18, in which 19 soldiers were killed. India blames terrorists based in Pakistan for the deadly strike. Swadeshi Jagran Manch, an organization promoting indigenous products, is holding a five-day event until Oct. 23 to display and sell products made in India, including fabrics, paintings and a range of household items. The body is backed by Hindu nationalist group Rashtriya Swayamsevak Sangh which is close to Prime Minister Narendra Modi's ruling Bharatiya Janata Party.
"We are giving a platform to small and medium-size entrepreneurs to showcase their skills," Sanjay Upadhyay, the event organizer, told the Nikkei Asian Review. "At the same time we are making consumers aware about quality Indian products. They should buy locally-made products instead of cheap Chinese items available in the market."China's state-run Global Times newspaper dismissed the calls to boycott Chinese goods as "just rabble rousing." Indian manufacturing "cannot compete at all with Chinese products," it said.
Ballooning trade deficit
India has a growing trade deficit with China which swelled to $52.68 billion in the financial year ending March 2016, from $48.48 billion a year ago. Total trade stood at $70.73 billion, with India's imports amounting to $61.7 billion.
"Increasing trade deficit with China can be attributed to the relative demand for imports in India and China for each other's goods," said Commerce and Industry Minister Nirmala Sitharaman.
India's major imports from China include telecoms equipment, computer hardware and peripherals, fertilizers, electronic components, organic chemicals, consumer electronics, electrical machinery and equipment, iron and steel. India's exports to China comprise ores, slag and ash, iron and steel, tin, leather, plastics, organic chemicals and cotton, among others."Let the Indian authorities bark about the growing trade deficit with China," the Global Times said. "The fact of the matter is they cannot do anything about it."
Taking strong exception to the Chinese state media report, the Confederation of All India Traders (CAIT) said China seems to be under the "wrong impression" that Indians cannot celebrate Diwali without Chinese products.
"Let the Diwali festival give an appropriate answer to China since the campaign [to boycott its products] has deeply penetrated among women and children ... who have made up their mind not to purchase Chinese goods this festival season," CAIT said.
CAIT says it expects to see a decline of about 30% in consumption of Chinese products this Diwali in comparison to last year. "Wholesalers have already imported these items from China two to three months before Diwali, and retailers are apprehensive of buying these products in bulk fearing that consumers may not be very forthcoming," Praveen Khandelwal, CAIT secretary general, told the NAR.
He said the estimated value of Chinese goods sold during Diwali last year was about 35 billion rupees ($523 million), and requested the government to come out with a policy to compensate Indian traders for their likely losses this year.
"There will be a considerable impact this time because it is not just about China. It's about China aligned with Pakistan," Khandelwal said.
CAIT has also appealed to the government to plan a long-term strategy ensuring all-out support for small manufacturing units to produce quality goods at cheaper prices, so as to discourage the use of Chinese products.
While small traders may have been feeling the pinch of the anti-Chinese sentiment, smartphone companies from the Communist nation do not seem to be affected.
Xiaomi says it sold 1 million smartphones in just 18 days since Oct. 1, aided by online Diwali sales rolled out by e-tailers such as Flipkart, Amazon and Snapdeal.
"India is an extremely important market in Xiaomi's globalization strategy. It has become our largest market outside of mainland China," Xiaomi Chief Executive Lei Jun said in a letter shared by the company on Facebook.
"I am confident that with the sustained efforts of our entire Xiaomi family, we will be able to capture the largest market share in India within 3-5 years! Mi India, let's make history together!" he said.
Chinese handset makers see huge opportunities in India, a country of 1.25 billion people. According to research group International Data Corp.'s report on the April-June quarter, South Korea's Samsung Electronics continues to dominate the Indian smartphone market with a 25.1% share. Local company Micromax follows at 12.9%; China's Lenovo Group, including Motorola, at 7.7%; Indian groups Intex has 7.1% and Reliance Industries' telecom arm Reliance Jio has 6.8%; and others hold the remaining 40.4%.
Karthik J., a senior market analyst for client devices at IDC India, said China-based vendors' shipments grew 28% over the January-March quarter, with Lenovo Group, Vivo, Xiaomi, Oppo and Gionee the key contributors driving this growth.