Chinese Companies Subverting Pm Modi’s Strict Import Regulations
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NEW DELHI: It is very easy to identify the big players who are importing Chinese goods and discourage them from doing so.
Chinese companies are significantly undermining the growth and advancement of Indian domestic industries, despite the “Make in India” initiative launched by Prime Minister Narendra Modi in September 2014.
Data indicates these efforts have not yielded the desired results, largely because of Indian companies’ hesitancy to diversify their focus both domestically and internationally and broaden their product portfolios to reduce dependence on Chinese goods, despite Beijing posing a strategic challenge to India.
As per the latest data by the Ministry of Commerce, India’s export to China was $2,570.88 million that was 3.44 % of India’s total export. In contrast, the total value of imports was $16,276.59 million which is 14% of India’s total import, making China the biggest source of imports to India.
According to research reports, China regained its position as India’s top trading partner in May, surpassing the United States after a two-year gap. In the fiscal year 2024, bilateral trade between India and China reached US$118.4 billion. Imports from China grew by 3.24% to US$101.7 billion, while exports to China increased by 8.7% to US$16.67 billion.
India imported US$4.2 billion worth of telecom and smartphone parts from China, constituting 44% of total imports in this category. Similarly, imports of laptops and PCs from China amounted to US$3.8 billion, making up 77.7% of India’s imports in this sector. The trade imbalance between India and China currently stands at a significant $85 billion.
To counter the anti-dumping policies of China, the government in May 2018 had restructured multiple bodies and formed the Directorate General of Trade Remedies (DGTR), a quasi-judicial body which independently undertakes investigations before making its recommendations to the Central government on the issue of unfair trade practices. It is the single national authority for administering all trade remedial measures including anti-dumping, countervailing duties and safeguard measures.
According to the latest data, the DGTR, under the Ministry of Commerce and Industry, is investigating a total of 124 anti-dumping cases, with 92 cases specifically concerning products imported from China by Indian companies.
One of the primary aims of DGTR is to provide a level playing field to the domestic industry against the adverse impact of the unfair trade practices like dumping and actionable subsidies from any exporting country, by using trade remedial methods under the relevant framework of the WTO arrangements, the Customs Tariff Act & Rules and other relevant laws and international agreements, in a transparent and time bound manner.
If the body finds sufficient prima facie evidence of dumping of subject goods by the subject countries, injury to the domestic industry and causal links between the dumping and injury exist, the authority initiates an investigation into the alleged dumping, and consequential injury to the domestic industry after which information is sought from the exporters in China and the importers in India.
One of the main points that the DGTR looks into is whether the normal values of the subject goods in the subject countries are significantly higher than the net export prices or not. If it is convinced that the price in a domestic country is much higher than the export price, then it becomes a clear case of dumping.
The DGTR’s investigation, called “sun-shine review” in technical terms, takes years to be completed, sometimes even a decade in which all interested parties are asked to submit their representation with record from Directorate General of Commercial intelligence and Statistics (DGCI&S) that tracks transaction-wise import data.
Importers are required to provide their audited accounts, including balance sheets, profit and loss accounts, and all relevant reports from the two most recent financial years. Additionally, they must detail their distribution channels within India, starting from the factory gate to the initial resale to customers. This includes describing both the physical movement of products and the financial transactions involved, such as invoices and payments.
Furthermore, importers need to provide a comprehensive description, including specifications, of the products under investigation that are imported into India and sold in their home market. They are also asked to identify any potential substitute products and assess whether producers or exporters from their country have any comparative advantages compared to Indian producers.
Officials said that in many cases that are related to China they have found that the “dumping margin”, which is the difference between the export price of the goods concerned and the normal value in the home market, is at least 30% which goes up to 100%.
The investigators have also found that as the period of the “sunset review” investigations approaches to check whether the anti-dumping measures need to be amended or removed, the producers/exporters from the subject country strategically reduce the volume of their exports to India. Sources said that since sunset review investigations occur periodically, all interested parties are able to predict the timing and arrange their exports accordingly. In many cases it has been observed that while the volume of imports was significant in the first two years of the investigation period, the same drastically declined during the last two years, which confirms the view that the exporters in China were artificially strategizing their exports in anticipation of a sunset review, the period of which is predictable.
An analysis of the official records by The Sunday Guardian showed that in the majority of the anti-dumping investigation cases, it is about 12-20 Indian companies that are importing goods from China in their respective fields from their Chinese producers who rarely number more than 10.
It is, sources say, very easy to identify the big players who are importing Chinese goods and discourage them from doing so.
According to officials, if it was not for these antidumping measures, the domestic Indian industry would not have been able to sustain their market share in wake of the unfair imports from China.
Citing findings, sources said that, in many cases the findings of the DGTR are not accepted by the concerned offices without any reason being assigned, thereby wasting the entire process and efforts of the DGTR. This has been attributed, in many cases and not all, to the pressure that is created by the Indian importers’ lobby, who do not want to lose out on the cheap product which they in turn sell for highly inflated prices that eventually lead to windfall profit. Many such import-companies are being promoted by well-established politicians with significant interest in business activities, especially in the field of renewable energy that entails import of, among other things, aluminium solar panel frames used for installation of solar plants.
Due to this practice, the domestic manufacturers are the most impacted. A manufacturer of solar panels that are used in the installation of solar power plants, said that 95% of these panels are being imported from China by Indian companies. This has led to virtually no space to compete for Indian manufacturers who then ultimately have to leave manufacturing and join the bandwagon of importers that are bringing Chinese-made solar panels.
According to him, unless the government imposes more taxes and increases import duties on Chinese products which will automatically lead to the increase in price at which the products are sold to Indian consumers and thereby encourage the importers to invest in buying products from Indian companies, the import of Chinese products into the Indian market will never stop nor will it push the Indian companies to invest in their own manufacturing.
These manufacturers said that unless the buying stops, the selling will not stop and this cannot happen just solely on the government’s intervention.
(With reporting by Sunday Guardian Live)
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