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Budget may seek to curb China imports

According to commerce ministry data, India’s merchandise imports from China in October 2022 contracted 9.73% to $7.85 billion compared with $8.7 billion a year ago. (Mint)Premium
According to commerce ministry data, India’s merchandise imports from China in October 2022 contracted 9.73% to $7.85 billion compared with $8.7 billion a year ago. (Mint)

  • The move comes amid India’s efforts to get China to respect existing agreements regarding the Line of Actual Control in the context of the 20-month long standoff between the two countries along the LAC in Ladakh

NEW DELHI : The Budget may announce steps to reduce India’s import dependence on China through various tariff and non-tariff measures, pursuing its strategy of Atmanirbhar Bharat (self-reliant India) in a “calibrated" manner, two officials aware of the matter said.

While India will continue to import raw materials and intermediates from its neighbour, it may disincentivise through strict enforcement the entry of finished Chinese goods imported directly into India or shipped in via a third country violating the "rules of origin" norm, they added, requesting anonymity.

The move comes amid India’s efforts to get China to respect existing agreements regarding the Line of Actual Control in the context of the 20-month long standoff between the two countries along the LAC in Ladakh.

It also comes in the immediate context of a clash between the two sides along the LAC in Arunachal Pradesh following an attempted incursion by Chinese soldiers that was repelled.

One way to check the influx of Chinese finished products is to recalibrate customs duties. The other is by levying anti-dumping duties, non-tariff measures such as strict enforcement of rules of origin, and encouraging cost-effective local manufacturing through incentives, the officials said. “Recalibration of customs duties is expected on several items," one of the two added.

Indian companies and government departments have raised red flags over the import of more than 100 Chinese products including polyester yarn, optical fibre, solar cells, vinyl tiles, saccharin, ophthalmic lenses, various steel items, chemicals, ceramics, tableware, kitchen ware, glassware, aluminium foil and pharmaceutical formulations such as amoxycillin and ofloxacin, the second official said.

“Matters are under examination for appropriate actions. It is expected that the Budget will address this issue," he said.

“There has been a fall in imports from China recently. While price corrections due to demand contraction globally could be one of the reasons, the government’s policy of Atmanirbhar Bharat has also played a major role," the first official said.

According to commerce ministry data, India’s merchandise imports from China in October 2022 contracted 9.73% to $7.85 billion compared with $8.7 billion a year ago.

Experts said the government’s trade policy and the production linked incentive (PLI) scheme to boost local manufacturing are working well in reducing overdependence on “unreliable" China and that the Budget may pursue the same policy line aggressively.

“China’s share in India’s imports in the last one year (April-September 2022 over the same period in 21) has declined...In many segments, alternative sources of supply have been arranged as China, with zero-covid policy, was not considered as a reliable supplier," said Ajay Sahai, director general and chief executive of the Federation of Indian Export Organisations (FIEO).

India’s main items of imports from China are electronics, electrical goods and machinery —and all have been covered under PLI to develop domestic capabilities, he said.

“PLI has already reduced imports in some electronics products while augmenting exports," he said.

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