Crackdown on imports from China upsets Indian exporters

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Indian exporters are apprehensive about heightened scrutiny of consignments from China by the Indian customs.

In a letter to commerce secretary Anup Wadhawan, Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf said some exporters had expressed fears over Indian goods being held up by customs authorities in Hong Kong and China apparently in response to a similar action allegedly being taken by officials at the India’s Chennai port.

Saraf has suggested that Wadhawan clarify India’s position formally on the alleged checking of consignments from China for the benefit of all stakeholders.

FIEO has suggested the government should impose a cess on India’s raw material exports to China than consider any outright ban on imports of Chinese goods in the wake of the border clash.

In a webinar, Saraf highlighted that given India’s excessive reliance on Chinese products, it shouldn’t resort to any knee-jerk reaction. Instead, the country must evolve a medium-term strategy to boost local production and, thus, reduce our import dependence on China and others.

“While an increase in tariff can be one way to achieve import substitution, a more effective strategy would be to provide an ecosystem which addresses the cost disability of Indian manufacturing leading to such imports,” Saraf said.

Just four product segments that mostly comprise raw materials (ore, organic chemicals, cotton and plastics) made up for as much as 40% of New Delhi’s $15.54-billion exports to Beijing in the first 11 months of FY20. But most of our imports from China are finished products, including electronics and electricals.

Between April 2019 and February this year, India’s trade deficit with China stood at a massive $47 billion. In FY19, the deficit was in excess of $53 billion.

Even before the pandemic spread its tentacles in India, the country’s goods exports had contracted by 1.5% year-on-year up to February last fiscal. Exports had contracted by almost 35% in March, a record 60% in April and 36.5% in May when the Covid induced lockdown was in force.

However, in the first two week of June, the exports were down by only 10-12%, as lockdown-related curbs were eased. India should explore free trade talks with other important partners, including the EU and the US, and renegotiate the terms of the RCEP agreement to its own advantage, if possible.

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