Chinese import of goods like umbrellas, toys hurting Indian MSMEs: GTRI

Increasing imports of goods such as umbrellas, toys, certain fabrics, and musical instruments are severely hurting MSMEs as many of these products are also made by domestic businesses, according to think tank GTRI.

The report said that during January to June 2024, India exported goods worth only $8.5 billion, while imports stood at $50.4 billion, resulting in a trade deficit of $41.9 billion.

This low export and high import makes China India's largest trade deficit partner.

"China accounts for 29.8 per cent of India's industrial goods imports. India must invest in deep manufacturing to cut dependence on import of critical industrial products from China," Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said.

He said that these imports from China are "hurting" Indian MSMEs, as many of the imported products are also made by these local businesses.

He noted that the cheaper Chinese goods make it tough for MSMEs to compete, leading to struggles for survival.

"Some MSMEs have to shut down or reduce their operations, and they find it hard to grow due to the easy access to low-cost Chinese products. These challenges affect job creation and economic growth in India," Srivastava said.

The GTRI data analysis stated that China supplies 95.8 per cent of India's umbrellas and sun umbrellas ($31 million) and 91.9 per cent of artificial flowers and human hair articles ($ 14 million).

Additionally, glassware ($521.7 million, 59.7 per cent), leather articles including saddlery and handbags ($120.9 million, 54.3 per cent), and toys ($120.2 million, 52.5 per cent) are seeing a similar trend, severely impacting domestic manufacturers, it said.

Even in ceramic products ($ 232.4 million, 51.4 per cent) and musical instruments ($15.7 million, 51.2 per cent), where Indian artisans once thrived, the dominance of Chinese imports is displacing local production, it added.

Also, Indian MSMEs are struggling to compete in industries such as furniture, bedding, and lamps; and cutlery.

"These are sectors where Indian small businesses have traditionally been strong but are now losing ground due to the influx of Chinese goods," it said, adding products like articles of stone, and carpets are under threat, diminishing the competitiveness of local producers.

According to the GTRI's data, silk import stood at $ 32.8 million from China, which is 41 per cent of India's total imports of silk during January-June 2024.

Srivastava said that India urgently needs to invest in deep manufacturing to reduce its reliance on critical industrial imports, especially from China.

"The heavy reliance on Chinese imports is eroding the market share and survival of Indian MSMEs. Strengthening domestic manufacturing is essential to protect these small businesses and maintain India's economic independence," he added.