Jaishankar now says India Inc must share responsibility for trade deficit with China

India’s businesses must share the responsibility for the trade imbalance with China, said External Affairs Minister S Jaishankar, who of late drew flak from the opposition for apparently questioning during an interview the rationale of picking up a fight with the communist country in view of its economic might.

The external affairs minister said that India’s companies were also responsible for the growing trade deficit with China as they had not developed supportive sourcing arrangements. He was delivering a speech at the Asia Economic Dialogue in Pune on Thursday.

He, however, also said that India now had an image of a country that could go to any extent to ensure its national security. He referred to India’s surgical strikes on terrorist infrastructure across its Line of Control (LoC) with Pakistan in 2016 and 2019 and its response to aggression by China along the disputed boundary between the two nations in eastern Ladakh.

Also Read: No country can come out of difficulties if its basic industry is terrorism: Jaishankar on Pakistan

“Indian companies have faced unequal market access with respect to China. We have also witnessed migration of businesses to China from India,” said Jaishankar, adding: “Responsibility for (India’s) trade imbalance with China is not just of government, it is an equal responsibility of businesses.”

India’s trade deficit with China surged by 45 per cent to reach $101.2 billion in 2022 from $69.4 billion in 2021. China’s exports to India jumped 21.7 per cent to $118.5 billion in 2022. India’s imports into China declined 37.9 per cent to $17.48 billion, according to official data released by the communist country’s government last month in Beijing.

“Indian corporates have not developed the kind of backwards (integration), vendor supplies, components and parts, ingredients and intermediates that should be supporting us," he said.

The external affairs minister said that the Atmanirbhar Bharat initiative of the Prime Minister Narendra Modi’s government was intended to send out a message to the industry to source domestically, not because it was a moral obligation, but because the national security would come under threat if the country continued to have massive external exposure.

Jaishankar blamed the India’s businesses for trade imbalances with China just after a comment he made during an interview with Asia News Internation triggered controversy.

“They are the bigger economy what I am going to do? I am a smaller economy. Am I going to sort of pick up a fight with a bigger economy? It is not a question of reacting. It is a question of common sense,” the external affairs minister said when he was asked India was always reactive, instead of being proactive, in dealing with the aggression by China along the Line of Actual Control (LAC) – the de facto boundary between the two nations.

His comment triggered criticism with the Congress using it to target the BJP-led government, saying that such “blasphemous” statement might demoralise the Indian Army soldiers, who were deployed along the LAC in eastern Ladakh to respond to the Chinese People’s Liberation Army’s military aggression.

The external affairs minister virtually ruled out the possibility of India extending any help to Pakistan to come out of the economic crisis. “No country is ever going to come out of a difficult situation and become a prosperous power if its basic industry is terrorism,” he said, adding: “Just as a country has to fix its economic issues, a country has to fix its political issues too, a country has to fix its social issues.”

"I would have a pulse (on) what do my people feel about it. And I think you know the answer," Jaishankar said replying to a question if New Delhi would help Pakistan out of the economic crisis.