English News

  • youtube
  • facebook
  • twitter

As India revs up its manufacturing sector, imports from China drop

India has reasons for cheer with a manufacturing PMI score of 56.4

As India reset its thrust on boosting its own manufacturing sector while diversifying supply chain network amid the Covid 19 pandemic, its imports from China dropped by 13 per cent during January-November this year.

However, India’s exports to China rose by 16 per cent in the 11-month period, Chinese customs data revealed. According to data, China’s main imports from India included organic chemicals, iron ore, unfinished diamonds, fish and crustaceans, cotton, granite stone among other items. That apart, recently China has also contracted exports of 100,000 tonnes of broken rice from Indian rice mills in the December to February period.

While the Chinese authorities blamed the “prejudicial attitude” of the Indian government for the drop in imports in the wake of the “border dispute” it took credit for increasing inward shipment from New Delhi. “China keeps an open mind about doing business with India despite the border dispute. Compared with China's action, India's economic punishment of Chinese businesses is abnormal and morbid,” Global Times quoted Zhao Gancheng, a research fellow at the Shanghai Institute for International Studies as saying. Experts, however, said that the overall slowdown in inward shipment was due to the Coronavirus pandemic. “Imports from China have dropped due to the pandemic, which slowed down the country’s overall imports.

That apart, we need to understand that India has focused on widening its supply chain for obvious reasons,” Ajay Sahai, director general and CEO, Federation of Indian Export Organisations (FIEO), told IndiaNarrative.com. Sahai also pointed out that the main export items from India comprise raw materials, which are then used to make finished products. “We have mainly exported raw materials to China, used to make finished goods. So in a sense, these are essential for the country to keep their manufacturing sector going.

It does not impact overall markets and jobs,” Sahai noted. “India must reduce its dependence on China not only to boost our own manufacturing sector but also to ensure diversification of the supply basket,” Nirupama Soundararajan, senior fellow and head of research, Pahle India Foundation said. <strong>Indirect imports from China a worry</strong> Experts also pointed out that India’s imports from Hong Kong have increased over the last two years which can be a worrying sign. Besides Hong Kong, trade analysts said that China could be re-routing its products—a large part could be finished goods as well – though countries such as Singapore and Malaysia with which New Delhi has trade agreements.

While New Delhi has already imposed measures including the mandatory quoting of ‘rule of origin’, which implies that all global suppliers of goods will have to mention the country of origin, a move that is expected to restrict cheap imports into the counrty.

However, authorities said that there is “enough evidence” that suggests that the dragon nation has conveniently circumvented the rule book. Based on the country of origin, goods either attract tariff concessions or duties. Experts have suggested that India must make it mandatory for companies that are supplying goods to India to disclose their ownership pattern in detail.