Can We Not Reduce Imports From China?

The current pandemic has clearly indicated that India does have the ability to undertake a higher percentage of indigenous manufacturing. As such, isn’t this the right time to start cutting down imports from China and boost local industry, suggests P V Balasubramaniam, Former Director and CEO, York Transport Equipment (Asia) Pte. Ltd., Singapore

The coronavirus pandemic is a wakeup call for India to question our trade policy. Let us discuss one aspect of it – the dependence on China. During January and February 2020, while China underwent a lockdown, the worry for India Inc. was sourcing the supply of parts and components for automotive, pharmaceuticals, chemicals, mobile phones, white goods, etc. Industries on average have 25-45% dependence on China for parts or rapid manufacture (RM) supply, and in some cases, almost 100%. Certainly, we cannot let this continue. Based on my experience in international business and working with China, I believe that we can substitute imports with local supply and compete with China globally.

India-China Trade

Let us look at the data first, all from the Directorate General of Foreign Trade (DGFT). Over the last 12 years, import from China has increased from USD 27.1 billion in 2007-08 to USD 70 billion in 2018-19. During the same period, India’s exports to China moved from USD 10.87 to USD 17.65 billion. The trade deficit widened from USD 16.29 to USD 53.56 billion during this period. And India Inc. seems to be happy so long as China can supply! On September 28, 2019, while the Regional Comprehensive Economic Partnership (CEP) negotiation was going on, it was reported in Economic Times, “India may cut or eliminate tariffs on 80% of products imported from China.”