Indian Msmes Struggle Amidst Rising Chinese Imports: GTRI

(MENAFN- KNN India) New Delhi, Sep 2 (KNN) A recent report by the Global Trade Research Initiative (GTRI) has highlighted the mounting challenges faced by Indian micro, small, and medium-sized enterprises (MSMEs) due to the increasing influx of Chinese goods in the domestic market.

The report, released on Sunday, details the significant competition Indian businesses face across various product categories, including umbrellas, glassware, cutlery, handbags, and cosmetics.

The report underscores the dominance of Chinese imports in displacing local production. It reveals that over 90 per cent of the umbrellas, artificial flowers, and human hair articles used in India are now sourced from China.

Additionally, in product categories such as glassware, leather, and toys, China's share of India's total market for these items has surged to over 50 per cent.

Specifically, the report states,“China supplies 95.8 per cent of India's umbrellas and sun umbrellas and 91.9 per cent of artificial flowers and human hair articles.

“China's market share in glassware has reached 59.7 per cent, in handbags 54.3 per cent, and in toys 52.5 per cent, reflecting a similar trend," the report highlighted.

The GTRI report further notes that even in traditional sectors like ceramic products and musical instruments, where Indian artisans once had a strong foothold, Chinese imports are now prevailing.

Moreover, the impact of Chinese imports is also being felt in industries such as paper and paperboard products, essential oils and cosmetics, and edible preparations, where MSMEs are seeing reduced market opportunities.

GTRI emphasises that the 'heavy reliance' on Chinese imports is eroding the market share and threatening the survival of Indian MSMEs.

While trade deficits in natural resources like crude oil and coal are less concerning, the growing dependence on imported industrial goods is perceived as a threat to India's economic sovereignty.

The report also highlights a worrying trend that India's industrial goods imports from China are on the rise.

Between January and June 2024, India exported USD 8.5 billion worth of goods to China but imported USD 50.4 billion, resulting in a trade deficit of USD 41.9 billion.

Notably, approximately 98.5 per cent of imports from China, or USD 49.6 billion, were industrial goods. China now accounts for 29.8 per cent of India's industrial goods imports and is the top supplier in all eight industrial goods categories.

Furthermore, the report indicates that India's trade deficit with 12 out of 23 countries has increased in the first half of 2024 compared to the same period in 2023.

The countries with the most significant increases in trade deficit include China, Russia, Iraq, Indonesia, and the UAE.

In light of these developments, the Economic Survey previously suggested that India has two strategic options to benefit from the 'China plus one' strategy including integrating into China's supply chain or promoting Foreign Direct Investment (FDI) from China.

The survey noted that focusing on FDI from China could be more advantageous for boosting India's exports to the U.S., drawing parallels with the success of East Asian economies.

(KNN Bureau)

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