Govt working on steps to cut import dependence on China, boost domestic manufacturing: Sources

The government is working on steps to reduce import dependence on China and boost domestic manufacturing, sources said on Thursday.

They said policymakers are not considering any knee-jerk measure against China in the wake of ongoing border tensions between the two countries.

China accounts for about 14 per cent of India's imports and is a major supplier for sectors like cell phones, telecom, power, plastic toys and critical pharma ingredients.

One of the major steps on which the government is working is to restrict low quality Chinese imports, and for that technical regulations, which includes safety and quality standards, for about 370 products are being formulated with a view to cut imports of these non-essential items from countries like China, they added.

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These items include chemicals, steel, consumer electronics, heavy machinery, telecom goods, paper, rubber articles, glass, industrial machinery, metal articles, furniture, pharma, fertiliser, food and textiles.

Policymakers are also looking at non-tariff barriers being imposed by India's trading partners such as China.

The other steps include attracting global companies that are seeking to set up alternate global supply chains outside China.

The government recently put import restrictions on tyres, while also making its prior approval mandatory for foreign investments from countries that share land border with India to curb "opportunistic takeovers" of domestic firms, following the COVID-19 pandemic, a move which will restrict FDI from China.

The commerce ministry has also identified 12 sectors -- food processing, organic farming, iron, aluminium and copper, agro chemicals, electronics, industrial machinery, furniture, leather and shoes, auto parts, textiles, and coveralls, masks, sanitisers and ventilators -- to make India a global supplier and cut import bill.

To cut import dependency on China for APIs (Active Pharmaceutical Ingredients), the government in March approved a package comprising four schemes with a total outlay of Rs 13,760 crore to boost domestic production of bulk drugs and medical devices in the country along with their exports.

It also set up a high level empowered group of secretaries, to be chaired by the cabinet secretary, and a Project Development Cell (PDC) in ministries/ departments with a view to attract investments to the country.

During April 2019-February 2020, India imported goods worth USD 62.4 billion, while exports to the neighbouring country stood at USD 15.5 billion in the same period.

The main goods imported from China include clocks and watches, musical instruments, toys, sports goods, furniture, mattresses, plastics, electrical machinery, electronic equipments, chemicals, iron and steel items, fertilisers, mineral fuel and metals.

India has time and again raised concerns over widening trade deficit with China which stood at about USD 47 billion during April-February 2019-20.