The government is planning to hike duties on imports from China and is in the process of identifying the ones on which duty would be hiked. The announcement about the new, hiked duty structure is likely to come over the next two-three months, a senior government official said.
"There is no question of not engaging in trade completely. But we have to identify areas where we can boost Make In India and the prime minister's vision for a self reliant India," the official said.
The government has already written to various industry chambers bodies like Confederation of Indian Industry, Federation of Indian Chambers of Commerce & Industry, and Assocham seeking comments on a host of goods imported from China.
All industry bodies have given their feedback on various products and commodities, except for in APIs, which are required in the manufacturing of medicines.
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"We had written for feedback on goods like electronic items, toys, organic and inorganic chemicals. Also commodities like steel and aluminium. The idea is to find out if import duties should be raised on these items, if yes, then how much of it can be produced in the country or which are the alternative countries from which they can be easily sourced and how dependent is the local industry on China for each of these items," the official said.
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In FY 2019-20, import of pharmaceutical products from China was worth $166.2 million but was one of the few items to post a growth of 12 percent. India has the third largest pharmaceutical industry in the world in terms of volume but is heavily dependent on China for APIs.
In February, Minister for Chemicals and Fertilisers D V Sadananda Gowda had said in Parliament that two-thirds of total import of bulk drugs or drug intermediaries come from China. Roughly, at least 90 percent of India's annual requirement of APIs is imported.
The duty hikes would include a mix of tariff and non-tariff barriers on the products, after identification, the official said.
In FY 2018-19, bilateral trade between China and India was worth $88 billion, with a trade deficit of $53.5 billion in China’s favour, the widest India has with any country.
"Local manufacturing has not taken off the way it should have, only because import duties are very low, making manufacturing way more expensive. The scale of production has to be upped," a trade expert who did not wish to be named, said.
"Duties need to be a bit higher so that imported components become expensive enough for local production to take off."
India’s trade deficit with China was $46.8 billion between April 2019 and February 2020.
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