Commerce Ministry wants to cut import dependence from China. Here’s why

By: |
May 24, 2019 8:35 PM

Steps taken by Prabhu has already resulted in narrowing trade deficit (difference between imports and exports) with China to USD 53.56 billion in 2018-19 from USD 63 billion in the previous financial year.

Commerce Ministry, import, dependence, China, RCEP, MEIS, economy news, Suresh Prabhu, FDA, Food and Drug AdministrationCommerce Ministry wants to cut import dependence from China. Here’s why 

A commerce ministry’s strategy paper has outlined steps like pushing exports, cutting import dependence and attracting foreign firms which are looking at shifting manufacturing bases from China with a view to reduce trade imbalance with the neighbouring country. The strategy paper, prepared by the ministry, was submitted to Commerce and Industry Minister Suresh Prabhu.

Steps taken by Prabhu has already resulted in narrowing trade deficit (difference between imports and exports) with China to USD 53.56 billion in 2018-19 from USD 63 billion in the previous financial year. To push export to China, the paper suggested suitable export incentives.

“Efforts would be made to support exporters by pursuing tariff reduction through RCEP (proposed mega trade agreement) and by providing suitable export incentives to adequately substitute the existing MEIS (Merchandise Exports from India Scheme) scheme,” it said. It said the ministry needs to vigorously pursue for greater market access for agriculture and dairy products, and pharmaceuticals.

The paper said Indian pharmaceutical firms face regulatory hurdles such as prolonged and unpredictable timelines for drug registration, demand for submission of detailed clinical trial data and requirement for revealing the drug formulation process at the time of filing for registration.

On this, the ministry would look at establishing an interface between Food and Drug Administrations (FDAs) of India and China for conduct of regular training programmer on regulatory standards and processes of filling dossiers in China; and relaxing product registration time from 3-5 years to one year. It would also looking at pursuing export orders where market access has been obtained from China for commodities like rice, sugar and sesame seed.

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Regarding import substitution, the paper noted that India’s imports from China are mainly dominated by electronics, telecom, electrical equipment and pharmaceuticals. Citing views of telecom industry, it said China is adopting a host of discriminatory and restrictive practices against Indian companies to bar them from participation in their procurement process.

The industry has suggested steps like focusing on local manufacturing of products like printed circuit board and camera modules; and creation of the research and development fund for the sector. Further, it said interventions are required for attracting foreign technology intensive firms which are relocating their manufacturing facilities away from China in light of the ongoing trade war between the US and China.

“India, with its vast working population, and large consumer market is an attractive destination for companies moving their manufacturing base out of China, and also for Chinese manufacturer for collaborating for setting up production base in India,” it said.
The sectors more likely to relocate to India are electronics, consumer appliances, consumer electronics, textiles, health care equipment and heavy industry.

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