17/01/2021
Why can't India manufacture at least basic things like toys and mobile phones instead of importing from china
A deep understanding is required for this. In short, many factor affect this, i will list a few, hope you will understand.
China is using low cost labour to manufacture huge scale of of products, even if the demand is low. Labour cost in india is high. So production cost makes the cost price of the same product high in India and low in China.
There are two ways of getting profit. First is collecting large profits per commodity but sale of commodity is low, for instance take apple. Second is Small profit on each commodity, but the sale is very high, like chinese smartphone venders (xiaomi, Oppo etc). Lets take a illustration Mathematically, Apple iphone cost price is ₹20. But they sell it at ₹100 and sell 5 copies. Then their profit is ₹400. Whereas, mi note 4 cost price is ₹10. But they sell 100 copies for ₹15. Then their profit is ₹500. And the class of people who can buy ₹15 product is exponential as compared to the ₹100 product. So the chinese makers use this policy as you see these products all over the market.
Third is clearing the competition. If you are a mutinational company having billions in pocket, then you can reduce the price even if you have to suffer losses, so that every one buys your product and other small scale companies who cannot withstand such pricing will reduce, and you will dominate the market as no one will give you competition, the price is as your wish. As like Jio and oneplus.
Fourth is government policy. Increasing import duty will sure increase the price of imported products , encouraging inland production of commodities. Which our govt did in this budget, but partially.
Rest will have deep economics terms, but yes these are the basic problem. Hope it makes you understand.
With thanks:akshay tahlan
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