The government could redirect the source-markets for electronic goods away from China — the single largest supply market now — to others like Singapore, Malaysia, Taiwan and the US, if it wants to really contain imports from the northern neighbour, says the WTC. More than 90 percent of the electronic goods imports from China are of integrated circuits, and television sets, according to the data collated by the World Trade Centre Mumbai on Monday.
China is the largest supplier market for the country contributing 14 percent of total non-oil merchandise imports.
The assessment comes after a violent border confrontation the two nations had on June 15-16 and the resultant political and popular call to boycott Chinese products on one hand and also reduce imports of raw material from that country.
The violent clash, the first such instance in decades, left 20 of Indian soldiers losing their lives.
In the electronics sector, the country is heavily dependent on Chinese suppliers. Electronic goods account for 32 percent of our overall imports from China which meets 40 percent of our total imports of electronic goods, which includes consumer electronics, industrial electronics, computer and IT hardware, mobile phones, strategic electronics, light emitting diodes etc, show the data collated by the WTC.
“Between April 2019 and February 2020, total imports of electronic goods stood at Rs 3.59 lakh crore. Out of this, imports from China stood at Rs 1.42 lakh crore or 40 percent of total imports of such goods,” WTC said on Monday.
“We imported 98 percent of parts used in electronic integrated circuits and micro assemblies from China. Similarly, our reliance on China was 93 percent in colour TV sets and 90 percent when it comes to imports of the subscriber-end equipment in the telecom industry,” it said.
Although the overall mobile phone imports declined sharply in FY20, the share of China increased in total imports. Cell phone imports almost halved to Rs 6,313 crore in April-February of FY2019-20 from Rs 11,304 crore in the full year of FY2018-19 primarily because of the increase in domestic manufacturing and the hike in import duty on handsets.
Imports from China also declined from Rs 6,265 crore in FY2018-19 to Rs 4,717 crore in April-February of FY2019-20. However, the share of China in overall imports grew from 55 to 75 percent.
On rerouting the supplier base, the report says we should diversify our imports basket until such time our indigenous production of electronic goods picks up.
Between 2014 and 2020, local production of electronic goods has grown at an impressive CAGR of 20.6 percent and this can grow at much faster pace given the market. Local production of electronic goods grew to Rs 5.33 lakh crore in FY2019-20 from Rs 1.73 lakh crore in FY2013-14.
These electronic goods include consumer electronics, industrial electronics, computer hardware, mobile phones, strategic electronics, electronic components and light emitting diodes.
In recent years, government has introduced various incentive schemes for local production such as electronic manufacturing clusters, scheme for promotion of manufacturing of electronic components and semiconductors and a scheme to promote indigenous manufacturing of electronic goods.
“Until the domestic production increases, we can diversify the import baskets for electronic goods away from China by sourcing integrated circuits and colour TV sets from Singapore, the US, Malaysia and Japan; telecom equipment from Singapore, Taiwan, Germany, Israel and Japan; and non-automatic voltage regulators and stabilizers from Singapore, the US, Italy and Denmark,” the WTC said.-Money Control