24-10-2025 Mains Question Answer
'India's dependency on China is inevitable.' Elaborate this statement and suggest measures which India is undertaking to reduce its dependency.
India’s growing economic interdependence with China, exemplified by a record-high trade deficit of $99.2 billion in FY 2024-25, highlights the complex dynamics of modern global trade. This dependency arises from China’s robust manufacturing capabilities, integrated supply chains, and competitive pricing, particularly in sectors critical to India such as electronics, pharmaceuticals, and consumer durables. While geopolitical tensions persist, India continues to rely on China for raw materials, intermediate goods, and technologically advanced products, making this dependency structurally inevitable in the short term.
Factors Contributing to India’s Dependency:
- Supply Chain Integration: China’s dominance in global supply chains ensures it remains a crucial source for raw materials and intermediate goods, which are essential for Indian manufacturing. India’s renewable energy goals are constrained by dependence on Chinese imports of solar modules and power equipment.
- Structural Factors
- Investment and FDI: Several Indian startups and tech companies have significant Chinese investment (e.g., Paytm, Ola, Zomato). This adds another layer of dependency. “Chinese FDI in Indian startups and technology platforms has deepened financial dependency, though government scrutiny post-2020 has reduced inflows.”
- Cost Advantage: Chinese products are cheaper due to economies of scale and advanced manufacturing technologies, making domestic alternatives less competitive.
- Critical Sector Reliance:
- Pharmaceuticals: India imports APIs worth $2.3 billion from China.
- Electronics: A significant portion of India’s $126.96 billion imports comprises electronic components and consumer electronics.
Measures Undertaken to Reduce Dependency:
| Strategy | Description / Examples | Impact |
| Policy Initiatives | Atmanirbhar Bharat Abhiyan promotes domestic manufacturing, strengthens MSMEs, and enhances ease of doing business. | Builds domestic capacity, encourages local entrepreneurship, reduces import reliance. |
| Production-Linked Incentives | Focused support for Electronics, IT Hardware, Automobiles, Auto Components, and Textiles through financial incentives. | Stimulates domestic production; India’s mobile manufacturing sector growth demonstrates success. |
| Supply Chain Diversification | Exploring alternate sourcing from Vietnam, Bangladesh, Indonesia; investing in R&D, technology transfer, and innovation. | Reduces over-dependence on China; strengthens resilience against supply chain disruptions. |
| Investment & Trade Regulation | Ban on Chinese apps, tighter FDI norms for bordering countries, and higher quality standards on imports. | Reduces financial and digital dependency, promotes domestic alternatives. |
| Strategic Partnerships | Participation in Quad and Supply Chain Resilience Initiative (with Japan, Australia). | Boosts regional cooperation for secure, diversified supply chains. |
While India’s dependency on China is partly inevitable due to cost and technological advantages, it is actively pursuing a balanced strategy of short-term import substitution and long-term capacity building. Initiatives like PLI schemes, Atmanirbhar Bharat, and diversification of supply chains demonstrate India’s effort to achieve greater self-reliance without compromising economic competitiveness. Success in sectors like mobile manufacturing and electronics indicates the potential to gradually reduce reliance on China while enhancing India’s strategic autonomy and industrial resilience.