Illustration: Chen Xia/Global Times

Indian External Affairs Minister Subrahmanyam Jaishankar said on Friday that Indian firms should use a "national security filter" when dealing with China and focus more on sourcing from domestic manufacturers, according to Indian media reports.

He emphasized that it does not mean that nothing can be sourced from China, but "we would much rather you work with Indian companies if there is an Indian option available to you. That I think is good for our national security."

While the "national security filter" rhetoric may be framed as a way to support Indian products and the "Make in India" initiative, it is ultimately a protectionist call driven by nationalist sentiments. 

It highlights the Indian government's determination to safeguard domestic industries, but also raises concerns about potential negative impacts on India's economic interests by limiting market options and hindering trade efficiency.

One of the main reasons for this concern is the subpar quality of Indian goods and the inadequate production capacity. India heavily depends on intermediate goods from China, and if Indian companies switch to using domestic products, it will affect the quality of the final products. This is not something that "national security filter" can address.

India's move toward protectionist policies reflects concerns about the vulnerability of its manufacturing and industrial base in the face of international competition, particularly from neighboring manufacturing powerhouse China. 

Despite the Indian government's efforts to restrict imports from China, China remains India's largest trading partner. China once again emerged as India's largest trading partner in 2023-24, with bilateral trade totaling $118.4 billion, according to economic think tank Global Trade Research Initiative.

India's focus on enhancing its domestic manufacturing capabilities, particularly in supply chain production, is understandable given its vast population and labor resources. Improving manufacturing capabilities could have a significant impact on India's economic growth and social development. However, it doesn't mean that India can recklessly adopt protectionism and pressure Chinese companies under the guise of "national security." It is important for India to strike a balance between promoting its domestic manufacturing and engaging in protectionist policies that may hinder economic progress.

When India launched the "Make in India" initiative in 2014 as part of its renewed focus on manufacturing, it aimed to increase manufacturing to 25 percent of GDP by 2025 from 16 percent at that time. Yet, over the past decade, despite major wins in the smartphone and electronics sectors, the country remains far behind its goals. The proportion of manufacturing to GDP has been stuck at about 17 percent in recent years.

Apparently, despite its advantages in low-cost labor and a massive market, India is still facing severe challenges in its industrialization push. To overcome these challenges, India may need to focus on improving labor skills and infrastructure, and implementing stimulus policies, rather than relying solely on protectionist measures like high tariffs and import restrictions. 

India's policy approach of seeking to boost domestic manufacturing through protectionism, which is a contradiction, has played a major role in the unsatisfactory progress. The Indian government aims to attract foreign companies, including Chinese companies, to enhance domestic manufacturing capacity and promote industrial upgrading. 

However, due to national security concerns, it is actually encouraging companies to buy domestic products. Such contradictory policies have created confusion for investors and local companies, affecting their decision-making process. While pursuing economic benefits, companies must also consider policy guidance and restrictions, increasing their operating costs and risks.

The Indian government needs to recognize that true national security is built on a strong domestic industrial foundation. Without foreign investment, including from China, to help build factories and local supply chains, how can it ensure economic security? Only by enhancing the competitiveness of domestic manufacturing, and improving product quality and service levels, can it truly ensure India's economic security and long-term development. 

This reality requires the Indian government to be more precise and scientific in policy formulation, considering both short-term protection needs and long-term development goals.

Therefore, finding a balance between trade protectionism and economic reality is a test facing India's political elites in the context of globalization. It is crucial for India to foster an environment that encourages innovation, competitiveness and sustainable growth in its manufacturing sector, without compromising on the principles of open trade and economic cooperation.