In FY 2018-19, China-India bilateral trade stood at $88 billion, with a trade deficit of $53.5 billion in China’s favour, India ‘s largest with any nation.
The government is planning to hike duty on Chinese imports and is in the process of identifying those on which duty would be hiked. A senior government official said the announcement about the new, hiked duty structure is likely to come over the next two-three months.
“There’s no question of not fully engaging in trade, but we need to recognise areas where we can improve Make In India and the dream of the prime minister for a self-reliant India,” the official said.
The government has already written to various chambers of industry bodies such as the Confederation of Indian Industry, the Indian Chambers of Commerce & Industry Federation, and Assocham seeking comment on a host of goods imported from China.
All industry bodies have given their feedback on various products and services, except in APIs required in the manufacture of medicinal products.
Imports of pharmaceutical products from China valued $166.2 million in FY 2019-20 but was one of the few items that posted a 12 percent growth. In terms of production, India has the world’s third largest pharmaceutical industry but is heavily dependent on China for APIs.
Minister for Chemicals and Fertilisers D V Sadananda Gowda said in Parliament in February that two-thirds of total imports of bulk drugs or drug intermediaries originate from China. Roughly, it imports at least 90 percent of India ‘s annual API requirement.
The duty hikes would include a mix of tariff and non-tariff barriers on the products, the official said.
“Local manufacturing has not taken off the way it should have, just because import duties are very low , making manufacturing much more expensive. Production scale must be increased,” said a trade expert.
“The duties must be a little higher so that imported components become expensive enough to take off local production.”
India’s trade deficit with China in the period from April 2019 to February 2020 was $46.8 billion.