India and China are going through a serious confrontation over an old unresolved border conflict. The conflict is not new and the standoff is also not new. The intensity this time might be different compared to previous standoffs and the amount of media attention it is generating also is at a different level due to the social media and 24/7 news channels which want something sensational every hour to keep their audience engaged. This conflict has resulted in a renewed demand for banning Chinese products in India. Also, it was not the first time any such demand had been made. India has a glorious history of banning books and movies. I agree that the demand to ban foreign-made goods is different in context compared to demanding a ban on some controversial book or movie. However, the central idea remains the same, people want to stop something that is not illegal per se but they want to block its legal path. That is, by calling for a ban or a boycott, people want to block legal access to those things that are allowed under normal circumstances. Also, I feel the current scenario is more like a call for a boycott than a ban.
First, if something is of national importance and critical to national security, then the government should come into action and take cognizance of that fact. If Chinese products are harmful to India's economy or national security interests, the central govt should make them illegal. If the trade terms are unfavorable, then the Indian government should negotiate a better trade deal with China. The current central government not only has the power to do these things, but they also have the mandate to do it if they want. Calls for such boycotts or bans are often the result of nationalism fever which is at its peak whenever something happens at the border and gets nationwide coverage. In India, normally these border skirmishes are used as a political capital, they have a great political value especially when some major election is around the corner. One can easily see the pattern in the way these things happen, they are so predictable that many times one gets to doubt if they are choreographed for mutual benefit at the cost of the lives of poor soldiers who are used as political cash, this will be very unfortunate if true.
Second, there is a downside if you try to manipulate the market artificially. For this, let's discuss what is the downside if you eliminate the competition not by outperforming it but by boycotting or banning it. The first immediate benefit is that you eliminate a competitor. Second, you can now enjoy the monopoly, especially if you were the second-best, now, you are the best. Third, consumers are forced to come to you, not because you are the best option, but because you are the only option. These are short-term benefits. India was a closed economy for at least a couple of decades until it opened in 1991. One of the major drawbacks of this approach is that the lack of competition results in a lack of incentive to spend on R&D, and a lack of incentive to improve. Monopoly is taxing on customers' pockets, the worst, govt may seize this opportunity to control pricing and production by enacting new rules and regulations (remember the license raj era in India?).
Finally, another drawback is that things that are banned get smuggled and eventually sold in a black market for higher than their fair market price. Underground liquor sales in so-called liquor-free states of India are an ideal example of this. Bans are rarely effective in stopping something unless the govt is really serious about implementing them, and most of the time they are not serious they do it for appeasement or political reasons. This is the reason why bans rarely work.
There are many other issues that one can discuss in this context, but the main thing that should worry Indians is the effect on the quality of available products in the marketplace and what if other countries take similar steps. Any country or its people have the right to decide what is best for them, they can choose to buy or not to buy whatever they want, and Indians can do the same as the rest of the world. Indians should just remember that as other countries like to sell their products in India, Indian businesses also need to sell their stuff outside to make a profit, and shutting the doors of a lucrative market like China is not a good option at this stage. The better option is to outperform the competition and make Indian products so attractive options that customers buy them on their own merit not under the fever of nationalism because fever comes and goes, but the quality stays.
Thank you for reading and please share your opinion about this topic.
First, if something is of national importance and critical to national security, then the government should come into action and take cognizance of that fact. If Chinese products are harmful to India's economy or national security interests, the central govt should make them illegal. If the trade terms are unfavorable, then the Indian government should negotiate a better trade deal with China. The current central government not only has the power to do these things, but they also have the mandate to do it if they want. Calls for such boycotts or bans are often the result of nationalism fever which is at its peak whenever something happens at the border and gets nationwide coverage. In India, normally these border skirmishes are used as a political capital, they have a great political value especially when some major election is around the corner. One can easily see the pattern in the way these things happen, they are so predictable that many times one gets to doubt if they are choreographed for mutual benefit at the cost of the lives of poor soldiers who are used as political cash, this will be very unfortunate if true.
Second, there is a downside if you try to manipulate the market artificially. For this, let's discuss what is the downside if you eliminate the competition not by outperforming it but by boycotting or banning it. The first immediate benefit is that you eliminate a competitor. Second, you can now enjoy the monopoly, especially if you were the second-best, now, you are the best. Third, consumers are forced to come to you, not because you are the best option, but because you are the only option. These are short-term benefits. India was a closed economy for at least a couple of decades until it opened in 1991. One of the major drawbacks of this approach is that the lack of competition results in a lack of incentive to spend on R&D, and a lack of incentive to improve. Monopoly is taxing on customers' pockets, the worst, govt may seize this opportunity to control pricing and production by enacting new rules and regulations (remember the license raj era in India?).
Finally, another drawback is that things that are banned get smuggled and eventually sold in a black market for higher than their fair market price. Underground liquor sales in so-called liquor-free states of India are an ideal example of this. Bans are rarely effective in stopping something unless the govt is really serious about implementing them, and most of the time they are not serious they do it for appeasement or political reasons. This is the reason why bans rarely work.
There are many other issues that one can discuss in this context, but the main thing that should worry Indians is the effect on the quality of available products in the marketplace and what if other countries take similar steps. Any country or its people have the right to decide what is best for them, they can choose to buy or not to buy whatever they want, and Indians can do the same as the rest of the world. Indians should just remember that as other countries like to sell their products in India, Indian businesses also need to sell their stuff outside to make a profit, and shutting the doors of a lucrative market like China is not a good option at this stage. The better option is to outperform the competition and make Indian products so attractive options that customers buy them on their own merit not under the fever of nationalism because fever comes and goes, but the quality stays.
Thank you for reading and please share your opinion about this topic.
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