Trade bodies say need time to stop reliance on imports from China

3 months ago 29
google news

Written by Prabha Raghavan , Aanchal Magazine | New Delhi | Published: June 26, 2020 5:25:18 am

india china border news, boycott chinese products, delhi hotels boycott chinese guests, delhi china protests, delhi city news Protesters burn Chinese flag and President Xi Jinping’s photo over the tensions at the border.

AS SEVERAL ministries move to block imports and investments from China following the recent border clashes along the border where 20 army men were killed, the industry is concerned about the adverse impact on several sectors. From pharmaceuticals to telecommunications and automobiles, industry associations are of the view that “knee-jerk” offensive against the neighbouring country till alternative vendors are finalised or domestic capacities are built will hurt companies and the economy.

Federation of Indian Export Organisation’s (FIEO’s) President, Sharad Kumar Saraf, and Director General, Ajay Sahai, hinted on Thursday that a “blanket ban” may not be feasible. The India Cellular and Electronics Association and the Automotive Component Manufacturers

Association are among other trade and industry associations which have echoed these views.

“What can help a smooth transition from reliance on imports to AtmaNirbharta are certain policy measures by the government like allowing grandfathering of duties on modules and cells for projects which have already been bid out. This will allow companies to seamlessly transition to domestic manufactured components as capacities within the country ramp up,” said Sumant Sinha, CMD, ReNew Power.

Over the last three months, there has been a concerted push by India to reduce reliance on unnecessary imports and potentially opportunistic investments coming especially from China.

Clear signs of such a move were first seen on April 18 after China’s central bank raised its shareholding in the HDFC Ltd, the largest private sector housing finance company. At that time, the Department for Promotion of Industry and Internal Trade (DPIIT) had said firms in neighbouring countries wishing to invest in Indian companies would now only be able to do so after receiving government approval – a move to curb “opportunistic” takeovers at a time when valuations of companies were low following the Covid-19 outbreak and subsequent lockdown.

“There is a target we are pursuing in line with ‘AtmaNirbhar Bharat’ which is to reduce unnecessary imports, not country-specific imports. Our goals include strengthening those sectors in India through hand-holding and giving them incentives, improving quality and getting investments,” said DPIIT Secretary Guruprasad Mohapatra.

The Indian Express on June 23 had reported that import consignments from China at ports like Chennai and Mumbai were learnt to be facing hurdles over the last fortnight, with clearances being held up by customs authorities. This may have inadvertently affected imports of crucial components and raw materials used by manufacturers in several industries here.

Among those impacted are certain pharmaceutical firms, which have been unable to receive their consignments of essential raw materials like active pharmaceutical ingredients (APIs) and key starting materials (KSMs) from the Mumbai port. China accounts for nearly 70 per cent of the bulk drugs imported by Indian pharma companies. This happened despite any written or verbal instructions from customs authorities or the Central Board of Indirect Taxes and Customs.

“Some of our member companies have brought it to our notice that consignments of APIs and KSMs only from China are stuck up at the port in Bombay and are reaching out to the customs authorities to understand the reason behind it,” Indian Pharmaceutical Alliance Secretary General Sudarshan Jain told The Indian Express.

In a letter to the Finance Minister and the Revenue Secretary, Pankaj Mohindroo, Chairman, India Cellular and Electronics Association, said: “The industry is already in very deep distress having lost production of over Rs 40,000 crore and has only recovered to less than 40 per cent of normalcy. We have just begun to limp back to normalcy after a massive set of losses for three months – and now this. India is at a very crucial moment with the launch of the PLI (production-linked incentive) scheme and two others which require a high level of motivation in the headquarters of global and local companies. They need to move large amount of plant and machinery, components, sub-assemblies, and in some cases, finished products, to India. Regardless of the reasons, such a move, especially without any prior notice, can be counterproductive.”

An Automotive Component Manufacturers of India (ACMA) representative said that, given that the industry is emerging out of a lockdown, a “knee jerk reaction” may disrupt the value chain and impact the recovery process.

The issue, which has also impacted as many as 50 American manufacturing firms in India across sectors like telecom, automobiles and fast-moving consumer goods, prompted the US-India Strategic Partnership Forum (USISPF) to flag its concerns with the commerce and finance ministries this week.

But with China’s overt aggression, some leaders in Indian industry are also of the view that India can over the next 4-5 years start producing many of these products in India. While initially, SN Subrahmanyan, CEO and Managing Director, Larsen & Toubro, the country’s largest engineering and construction firm, said in an interview cautioned that “to take a total view that we can boycott the Chinese goods” was not feasible, the next day he said India can “drastically reduce dependence on Chinese products”.

“We can drastically reduce our dependency on imported products including those from China by putting processes and systems in place to develop a large scale, efficient and cost-effective domestic industrial ecosystem over a medium to long term. The atmosphere is right for that and we should accelerate this,” he said in the July 23 statement.

Power Minister RK Sinha also said on Thursday his ministry was planning to impose basic customs duties (BCD) of around 15-25 per cent on solar equipment starting August. This duty would subsequently be raised up to 40 per cent, he said.

The Directorate General of Trade Remedies (DGTR) has been investigating around 35 cases of dumping from China across products, including chemicals, steel, polyester yarn, copper and various yarns. Earlier this week, it had announced anti-dumping duties on certain types of steel products imported from China, Vietnam and South Korea for a period of five years.

It has also recommended anti-dumping duty on organic base aniline and antimicrobial agent ciprofloxacin hydrochloride imported from China, alongside the fresh action in solar, steel etc.

Since the announcement of the Atmanirbhar Bharat campaign and the death of 20 Indian soldiers during violent clashes in Ladakh on June 15, the government has taken measures that directly or indirectly limit China’s presence here.

For instance, the railways ministry last week said that its Dedicated Freight Corporation of India Limited (DFCCIL) was going to terminate a Rs 470 crore contract for signaling works in UP that had been given to a Chinese firm.vThe Ministry on Thursday said its Dedicated Freight Corporation of India Limited (DFCCIL) is going to terminate the mega-contract of a Chinese firm engaged in signaling works in Uttar Pradesh. DFCCIL earlier that week had stressed the need to terminate the contract to stick to the project deadline.

The Indian Express had also reported on June 17 that the Department of Telecommunications (DoT) had conveyed to state-owned Bharat Sanchar Nigam Ltd (BSNL) not to use Chinese-made equipment in the upgradation of its 4G facilities.
Since the announcement of the Atmanirbhar Bharat campaign and the death of 20 Indian soldiers during violent clashes in Ladakh on June 15, the government has taken more measures that directly or indirectly have been limiting China’s presence here.

For instance, the railways ministry last week said that its Dedicated Freight Corporation of India Limited (DFCCIL) was going to terminate a Rs 470 crore contract for signaling works in UP that had been given to a Chinese firm.vThe Ministry on Thursday said its Dedicated Freight Corporation of India Limited (DFCCIL) is going to terminate the mega-contract of a Chinese firm engaged in signaling works in Uttar Pradesh. DFCCIL earlier that week had stressed the need to terminate the contract to stick to the project deadline.

The Indian Express had also reported on June 17 that the Department of Telecommunications (DoT) had conveyed to state-owned Bharat Sanchar Nigam Ltd (BSNL) not to use Chinese-made equipment in the upgradation of its 4G facilities.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest India News, download Indian Express App.

© The Indian Express (P) Ltd

  1. Homepage
  2. India