MC EXCLUSIVE We can’t wish China away, despite all kinds of friction, says Sanjeev Sanyal

If you want to be in the global supply chain, you cannot wish away China, Sanyal said.

Despite all types of friction we have with China,we cannot wish them away, said Prime Minister’s Economic Advisory Council Member Sanjeev Sanyal, and added that they are a global power and they are a major source of all manner of industrial inputs.

"We have to learn to deal with them. Obviously, in our terms, we still have to learn to deal with them. Now, in that context, it's good that there's been a thaw in our relationship with them," Sanyal told Moneycontrol in an exclusive interview.

"There are many industries in India which rely heavily on inputs from China. Now, in some of those cases, we may want to create our own domestic capability, but you can't do this for everything. So, there will be a role for Chinese imports or even investment. And I think we should be open to that," he added.

A Moneycontrol analysis showed that India’s import dependence on China extends far beyond everyday household items such as nail clippers, stretching into specialised industrial inputs. Beijing supplies over 90 percent of India’s imports of pencil leads, cellophane tape, and weighing machines, as well as critical railway parts such as axles and wheels.

In certain categories, India is almost entirely reliant on Chinese suppliers. Strollers, prams, and wheelchairs fall into this bracket. The shift has been especially stark in the post-pandemic period. For example, leather sofa covers and cigarette lighters—where China earlier accounted for less than 10 percent of imports—now see more than 90 percent sourced from Beijing. Similarly, jewellery boxes, pen holders, and cellophane film that once had diverse sourcing are now overwhelmingly dependent on China.

Sanyal further said that of course, he doesn’t want the Chinese to take over India’s telecom industry, but there are areas where they will play a role. "If we want to be in the smartphone manufacturing business, we simply wouldn't be able to do it if we didn't import significant, large numbers of inputs from not just China, but other countries as well."

Also, if you want to be in the global supply chain, you cannot wish away China, Sanyal added. "We have to be pragmatic about this. Now, as I said, that doesn't mean we rush to join Regional Comprehensive Economic Partnership (RCEP). We are unlikely to do that. But there will be many areas where we will collaborate, even as we compete with them."

Moneycontrol reported on September 3 that Chinese telecom majors Huawei and ZTE are unlikely to see immediate regulatory relief for their India operations despite New Delhi and Beijing reviving bilateral ties and exploring fresh electronics manufacturing partnerships.

Industry executives and officials said that both vendors continue to be blocked from bidding for new contracts as they have yet to secure approval under India’s ‘trusted sources’ guidelines.