As is well recognized even among Indians that one of many reasons that India is behind China is that India did not open up earlier enough.
It is obvious that interest groups in India do not to open up to harm their pathetic products and interest at the expenses of their consummers.
Perhaps true that Chinese goods are cheap. That is precisely why we value the Chinese goods: they keep our inflation low.
If you take that in a derogatory way, then why India cant even produce cheap products? Doesn't that sound even cheaper?
Simple economics tells us, if products are not welcomed by consumers, the products cant be flooded in market. Nest pas?
China keeps its costs low artificially for the exports by regulating its currency. So please do not brag on the cost of manufacturing. If you were to allow the market adjustment of Yuan then it will be a completely different scenario. So let us just leave your thoughts on imported inflation also aside. The worry should be the impending deflation for you with the high lendings over the last years by your bank if you understand your economy even a little bit.
The burgeoning trade deficit between India and China can not be justified as India cannot be reduced to a consumer country due to its needs of development. It is different when you have a positive trade ratio with Europe or US when compared to India because of the different levels of development of these economies.
Even when other major orgnanizations do business in India, they are clearly told that they have to set up local manufacturing over a period and that is part of the manufacturing license conditions. Chinese companies should be no different. If they think that India is a market worth committing to then they should invest in local manufacturing so that the forex is not adverse for India.
The reasons for the GOI restrictions are very clear:
1. Security reasons so your companies should get the Indian labs to certify your products and couter gaurantee everything.
2. Economic reasons. Make local manufacturing and do business. That is the way to commit to a market.
All other discussions does not even need to be considered. And lastly, Cheap is only relative......