Indian Navy In South China Sea and Chinese Goods In India

Weekend Reading!

Dear Readers,

My colleague Venu Gopal Narayanan has a hunch on what our sleek Indian Navy ships are up to in the South China Sea.

And speaking of the sea, today we also dive deep into our dependency on Chinese imports.

Tirumala Venkatesh discusses India's plans to become more self-reliant and whether these efforts will help India catch up with its biggest trading partner.

Catch all things China in today's newsletter. Happy reading!

- Anmol N Jain

What is Indian Navy doing in the South China Sea?

The news: 3 Indian Navy ships have set off for the South China Sea: INS Delhi (a guided-missile destroyer), INS Kiltan (an anti-submarine corvette), and INS Shakti (a fleet tanker).

Why it matters: This deployment caught attention when a Hong Kong-based newspaper hinted that it could provoke China.

A needless observation given that Indian Navy would have factored this already and was also best suited to take such risks.

Key questions: Is it linked to Germany's naval deployment — Unlikely. That would mean aligning with NATO, which isn’t India’s policy. Plus, German Chancellor recently visited Beijing.

• Routine or strategic — Strategic, the timing suggests. Kiltan’s presence in Philippines coincides with China’s aggressive exercises near Taiwan.

• Payback — Maybe. Last year, Chinese vessels disrupted India-ASEAN exercises. This could be a response.

• Sign of present or impending tensions — Possibly. PM Modi’s uncharacteristic, curious visit to Bhutan and EAM Jaishankar’s foreign policy focused campaign goes beyond just elections.

Bottom line: This government does not do routine. This deployment isn't routine. It reflects India's assertiveness in securing its interests, even if it irks China.

"From China, With Love" — No More? Talking India's Import Dependency

My colleague Tirumala Venkatesh talks about India’s imports from China in his very detailed and timely piece.

Big picture: In 2023-24, India imported $101.7 bn worth of goods from China, exporting back only $16.7 bn. This massive trade imbalance screams our dependency on Chinese imports.

Why it matters: More than cheap consumer goods, we mostly import intermediate and capital goods — crucial for our manufacturing and industrial sectors.

• Intermediate goods, like mobile parts and APIs for drugs, and capital goods imports, like machinery, are essential for production.

• Consumer goods imports are decreasing, both in value and volume.

Questions we need to ask: Why do we import so much from China? What are these imports, and can we avoid them? How can we reduce these imports in the long run?

Strategic measures in sight: India's Production Linked Incentive (PLI) scheme aims to boost domestic manufacturing.

• Government policies are setting quality standards to avoid substandard imports.

• Efforts are underway to develop a strong API/bulk drug manufacturing ecosystem.

Global context: It’s not just us. Many major economies depend heavily on Chinese imports.

• US and EU are also taking steps against Chinese over-supply, which could affect global trade dynamics.

Bottom line: India’s strategy is about balancing immediate needs with long-term self-reliance. Understanding the nature of these imports and reducing them is key to enhancing our economic resilience.

Go deeper: Link to Tirumala Venkatesh's detailed piece — "Chinese Imports Into India: Analysing Strategic Measures To Enhance Self-Reliance"