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India-China trade deficit widens, imports rise by 29 pc in 5 years

Union Minister of State for Commerce and Industry Anupriya Patel informed that India’s total imports from China increased by nearly 29 percent in the past five years. Annual imports from China rose from USD 89714.23 million to USD 115,419.96 million between 2017-18 and 2021-22

Despite continuous disputes between India and China on several issues, India is unable to curb its imports from Beijing. The reason why India’s trade deficit with China is increasing every year.

In the ongoing Lok Sabha session, Union Minister of State for Commerce and Industry Anupriya Patel informed that India’s total imports from China increased by nearly 29 percent in the past five years. She further informed that the annual imports from China rose from USD 89714.23 million to USD 115,419.96 million between 2017-18 and 2021-22.

The minister was responding to a question on the details of commodity-wise trade with China during the last five years. Along with the increased import, Commerce Ministry’s data show that there has been a constant decline in India’s export to China.

India’s y-o-y export fell by 25% in May this year. As per the data, India exported commodities worth $1.6 billion to China. This marks a straight 25% decline from its exports worth 2.1 billion dollars in May 2021

The impact of COVID might have reduced our daily lives in terms of health, but the pandemic continues to deeply impact the economy at the macro level. The resurgence of COVID in China has resulted in a strict lockdown in the country. This means a reduction in the industry operation in the country causing a decline in demand for products like iron ore, cotton, and meat. Notably, these were the things that were exported from India to China.

Whereas, as India’s manufacturing sector is growing, the requirement for raw materials is fulfilled by the exports from China.

A large portion of the total imports are animal or vegetable fats; ores, slag, and ash; mineral fuels, inorganic chemicals, organic chemicals, fertilizers, tanning or dyeing extracts, miscellaneous chemical products, plastic articles, paper, and paperboard, etc, government data showed.

On whether the Government is taking measures to reduce dependence on imports from China, especially since the mid-2020 Galwan clash, the minister replied the Government has launched Production Linked Incentive (PLI) schemes in 14 sectors which will make Indian manufacturers globally competitive, attract investment in the areas of core competency/cutting-edge technology. Under the scheme, companies will get incentives for ramping up production from their domestic units. Along with this, the scheme also promotes the set up of new manufacturing units by the companies in the country. The scheme will ultimately help in enhancing Indian export to the countries.

PLI has been implemented in certain key sectors that receive high imports from other countries. These sectors include Key Starting Materials/drug Intermediates Active Pharmaceutical Ingredients (APIs), and large-scale electronics manufacturing.

India’s import heavy medical and pharmaceutical industry is also included in the PLI scheme. The scheme has been implemented in the manufacturing of medical devices, electronic products, pharmaceutical drugs, food products, large electronic items like AC LED, etc.

The solar and automotive industry is also included in the scheme as high-efficiency solar PV Module, automobiles and auto components, and advanced chemistry cell batteries, also receive huge imports from other countries.

“Technical Regulations (TRs) have been framed for several products for the maintenance of standards/quality of imported products. This will check the import of substandard products,” the minister said.

Several trade remedial actions have been taken against imports from China to protect the domestic industry from serious injury against unfair trade, the minister further said in her reply.

There had been several calls to shun Chinese products after a border clash with China in 2020 in which 20 Indian soldiers and several PLA soldiers were killed. Following the event, India imposed a ban on 59 apps including Tik Tok, UC Browser, and other apps. Almost all the apps banned have some preferential Chinese interest and the majority have parent Chinese companies.

Notably, the government procurement portal GeM has made it mandatory for sellers to mention “country of origin” on products they wish to sell through the platform, a move aimed at promoting Aatma Nirbhar Bharat. Also, all e-commerce companies operating in India have to mention the country of origin of products being offered for sale. LiveMint

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