Chinese imports defy self-sufficiency, border problems; inputs remain the key

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Despite India’s efforts to reduce its dependence on Chinese imports amid an increased emphasis on self-sufficiency as well as escalating tensions along the border, the country’s bilateral trade with the China grew 49.4% in the first nine months of 2021 compared to the same period in 2020, according to Chinese government data.

Indian imports from China reached $ 68.46 billion in the first nine months of 2021, up 51.5% from the corresponding period of 2020, which was affected by Covid-related restrictions -19, according to data from the General Administration of Customs of China. Imports increased 21.6% compared to the same period in 2019, which was unaffected by the pandemic.

The sharp increase in imports brought India’s trade deficit with China to $ 46.55 billion in the first nine months of 2021, from $ 29.86 billion in the previous year period and $ 42.96 billion during the corresponding period in 2019. India’s official statistics on bilateral trade with China are only updated to July 2021. India’s total trade with China was $ 90.38 billion between January and September and is expected to exceed $ 100 billion by the end of the year.

According to data from the Ministry of Commerce, China was India’s largest trading partner during the April-July period, followed by the United States, the United Arab Emirates, Saudi Arabia and Singapore.

Some of India’s top imports from China include components for smartphones and automobiles, telecommunications equipment, plastics and metals, active pharmaceutical ingredients (APIs), and other chemicals.

Experts said that while imports from China have increased, it is important to note whether the rise is due to intermediate or finished products. Vinod Sharma, Managing Director of Deki Electronics and Chairman of CII’s National ICT Manufacturing Committee, said India should increase component manufacturing and the share of India-designed electronics to boost battery life and potentially reduce the imports.

“It is clear that the industry (mobile and electronics) has a long supply chain,” Sharma said, adding that there had been an increase in the share of intermediate goods such as PCBs (printed circuit boards ) in imports compared to finished products such as mobile phones.

Sharma added that the fact that India was still largely involved only in the assembly of electronic products meant that Indian companies did not have the discretion to source components.

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

Ministry of Commerce officials, however, pointed out that India’s trade growth with other key trading partners, including the United States, the United Arab Emirates and Australia, was still higher than the growth in trade. with China. India is currently negotiating Free Trade Agreements (FTAs) with the UAE, EU, UK and Australia.

In June 2020, the Indian and Chinese military clashed in the Galwan Valley in Ladakh. Soon after, the Energy Ministry imposed a de facto ban on the import of electrical equipment from China, citing cybersecurity concerns.

The government has also asked state-owned telecommunications companies BSNL and MTNL to exclude Chinese telecommunications equipment companies, including Huawei and ZTE, from its network upgrade process.

The government also changed foreign direct investment (FDI) rules making Center approval a requirement for all FDI into Indian companies from neighboring countries – apparently aimed at preventing opportunistic takeovers of domestic companies. by Chinese companies during the pandemic.

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