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Chinese imports defy self-reliance push, border issues; input products remain key

India’s imports from China rose to $68.46 billion in the first nine month of 2021, up 51.5 per cent from the corresponding period in 2020, which was impacted by Covid-19 related restrictions, according to data from the China General Administration of Customs.

Written by Karunjit Singh | New Delhi |
Updated: October 17, 2021 7:29:24 am
Imports were up 21.6 per cent over the same period in 2019, which was not impacted by the pandemic.

Despite India’s efforts to reduce dependence on Chinese imports amid an increased emphasis on self-reliance as well as escalating tensions along the border, the country’s bilateral trade with China has grown 49.4 per cent in the first nine months of 2021 as against the same period in 2020, as per Chinese government data.

India’s imports from China rose to $68.46 billion in the first nine month of 2021, up 51.5 per cent from the corresponding period in 2020, which was impacted by Covid-19 related restrictions, according to data from the China General Administration of Customs. Imports were up 21.6 per cent over the same period in 2019, which was not impacted by the pandemic.

The sharp uptick in imports has pushed India’s trade deficit with China to $46.55 billion in the first nine months of 2021, up from $29.86 billion in the year-ago period and $42.96 billion in the corresponding period in 2019. India’s official statistics on bilateral trade with China are updated only till July 2021. India’s total trade with China was $90.38 billion in the January-September period, and is on track to cross $100 billion by the end of the year.

According to Commerce Ministry data, China was India’s top trading partner in the April-July period, followed by the US, UAE, Saudi Arabia and Singapore.

Some of India’s key imports from China include components for smartphones and automobiles, telecom equipment, plastic and metallic goods, active pharmaceutical ingredients (APIs), and other chemicals.

Experts said that even though imports from China have increased, it was important to note whether the rise was due to intermediate or finished goods. Vinod Sharma, managing director of Deki Electronics and chairman, CII national ICTE manufacturing committee said that India would need to boost the manufacture of components and share of electronic goods designed in India to boost self reliance and potentially cut imports.

“It is clear that the (mobile and electronics) industry has a long supply chain,” said Sharma adding that there has been an increase in the share of intermediate goods such as PCBs (Printed Circuit Boards) in imports relative to finished goods such as mobile phones.

Sharma added that the fact that India was still largely involved only in the assembly of electronic goods meant that Indian firms do not have discretion on sourcing components.

He added that there was a need for the government to boost the use of Indian components in products through “a nudge in terms of market access.”

Officials at the Commerce Ministry have however pointed out that growth in India’s trade with other key trading partners including the US, UAE and Australia was even higher than the growth in trade with China. India is currently in the process of negotiating Free Trade Agreements (FTAs) with the UAE, EU, UK and Australia.

In June 2020, Indian and Chinese militaries clashed in Ladakh’s Galwan Valley. Soon after, the Power Ministry imposed a de facto ban on the import of power equipment from China citing cybersecurity concerns.

The government also asked state-owned telecommunication companies, BSNL and MTNL, to exclude Chinese telecom equipment firms including Huawei and ZTE from its network upgrading process.

The government also modified foreign direct investment (FDI) rules making the Centre’s approval a must for any FDI in Indian firms from neighbouring countries – apparently aimed at preventing opportunistic takeovers of domestic firms by Chinese companies during the pandemic.

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