Machibet777 APP Can India reduce its dependence on China?

NEW DELHI: In moves that are meant to clearly signal India’s displeasure at the recent Chinese intrusion in Ladakh, which resulted in the death of 20 Army personnel, the government is considering restricting imports from China. Plans are to increase customs duty on close to 20 product segments, others will be placed under import licensing. “It is not a China-specific duty action but an overall increase in customs duty, although the idea is to focus on products which are coming in large volumes from China,” an official explained. medium77525916But just how dependent is India on China? According to a paper by policy think tank Research and Information System for Developing Countries, just 327 products — ranging from mobile phones and telecom equipment to cameras, solar panels, air conditioners and penicillin — accounted for nearly three-fourths of the imports from China. It also pointed out that it is possible to find alternative sources to get these goods or manufacture them in India. medium77525935The paper used UN Comtrade data to estimate the value of these “critically sensitive imports” at $66.6 billion in 2018 in overall imports of a little over $90 billion. In 2018-19, official numbers had pegged imports more. “Such export monopoly of China has to be diluted in view of strategic requirements,” the report said.A product was considered sensitive if China accounted for over 10% share of imports or if the value of shipments was $50 million more. “Such export monopoly of China has to be diluted in view of strategic requirements,” the report said. medium77525997In terms of the number of goods imported from across the border, the share of the 327 sensitive products was less than 10% of the 4,000-odd items that were imported from China. The study, which was shared with TOI, estimated that in case of 82%, or over 3,300 products, China was not the most competitive producer. medium77526031But there are also products where China is the sole exporter. The product base ranges from everyday-use items such as earphones and headphones to microwave ovens and certain types of washing machines. The list also has several types of machinery, some auto components, escalator components, certain acids and chemicals and fertiliser like diammonium phosphate, where China is the sole supplier. “It is possible to produce some of the products domestically if other sources are not immediately available,” RIS director general Sachin Chaturvedi told TOI. The RIS paper suggested taking a strategic view while deciding on alternative sources for imports. medium77526049In fact, since March, the government has started tapping overseas missions to identify alternative sources of import of products. Economists and traders, however, point out that it may not be possible to find the products at the same scale, something that even the RIS report points to. “As China is empowered with scale factor, other competitors lose their grounds when delivery of voluminous trade takes place,” the study noted.However, following the Covid-19 outbreak, several companies are looking at de-risking their production chains by setting up or relocating facilities to other countries. medium77526348The report’s author, S K Mohanty, told TOI that in several cases, domestic production should be encouraged. "Places where diversification of import sources is not possible, local manufacturing is a better option. We have suggested short-term and medium-term solutions," said Mohanty.He also said that though India’s share in China’s trade may be low, it is a significant contributor to its overall trade surplus. "Unlike what many people are arguing, a diversification of the import basket will impact China," Mohanty said.Source: RIS, Govt; Graphic: Karthic R Iyer