As if there wasn’t enough cause for friction between India and China, Larsen and Toubro (L&T) chief A.M. Naik highlighted another last weekend when referring to the power sector. Apparently, “China is systematically killing” Indian manufacturing, the answer to which is imposing a “25% anti-dumping duty”.
Cheap Chinese manufacturing is the favoured punching bag the world over for those who can’t stand competition. And India’s showing no exception.
Admittedly, there are geopolitical considerations at stake for India. But as the trade deficit with China widens over the last few years, it’s giving vent to populism, not some concerted strategy. Earlier this decade, including last year, toys and phones animated manufacturers and policymakers. Now, the fear is hitting more heavy-duty sectors.
Last month, the Planning Commission began studying how India could increase domestic power generation. China is the unstated elephant in the room, with commission member Arun Maira noting: “The government would also look at the pros and cons of different sources of equipment.”
One concern is China’s product quality. It’s often unclear if “quality” is a ruse for protectionism. A Central Electricity Authority (CEA) audit in 2008 questioned Chinese quality, but a CEA panel is now praising it, as the?Business Standard reports.
The other, more obvious, concern is low prices. The likes of L&T may be peeved by Chinese competition in one kind of product, say, in manufacturing thermal power generation. But the same people seem to welcome China’s involvement in another product. Mint reported in November that L&T is in talks with China’s Dongfang Electric Corp. to collaborate on hydroelectric projects.
That only goes to show how much India’s firms depend on China. One company may be hurt in one sector, but another isn’t. On the whole, when the competition is high-cost European or a state-owned Indian power firm, it’s China that could help private sector expansion here.
And if India wants its domestic manufacturing to compete at comparable costs, it should stop trying to block outside firms, and ask how it can better internal conditions. But that would mean a concerted policy that improves financing conditions, not to mention land acquisition clarifications and better regulations. Protectionism is just so much easier, no?
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