Centre readies economic stick to hit back at China

China-India border tensions are having an economic fallout, with the Union government readying a series of moves — from import substitution to duty hikes — in what seems to be its riposte to the recent bloody clash in eastern Ladakh.

Import of Chinese toys, electronics, capital goods and an array of consumer durables may gradually be cut down as various ministries in the government are in the process of shortlisting hundreds of items for import substitution.

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“The move is a part of India’s broader policy of self-reliance and reduction of imports in the areas where it is not very difficult to do so as proposed by Prime Minister Narendra Modi. It has nothing to do with any specific country. India will reduce its dependence on imports from wherever possible,” official sources told DH.

They said over 350 imported items could face certain restrictions in the near future. Though the goods could be from across the globe, it is a fact that India imports a large number of goods from China.

Read: At least 20 Indian Army personnel martyred in face-off with China in Ladakh

Alternatively, there could also be an import duty hike on 100 major imports from China and elsewhere.

In a sign of the government’s mood, the railways on Thursday cancelled a China firm’s signalling contract. A day earlier, the DoT had asked BSNL to not use China-based firms’ equipment in its network.

Read: All you need to know about Ghulam Rassul Galwan — The man after whom the Galwan river was named

India’s 10 major imports from China include electrical machinery, nuclear reactors, organic chemicals, fertilisers, auto component, iron and steel and chemical products.

In 2018-19, 40% of India’s total imports of electrical machinery and equipment came from China, 31% of machinery and nuclear reactors arrived from China while plastic imports from the neighbouring country were 18% of India’s total imports. Fertilisers and organic chemicals imports, too, were above 60%.

Besides, India imports a vast range of finished goods as well as generic drugs, where our reliance on the communist country is as high as 70%.

“A sudden curb on Chinese imports will do more harm to the country. We need to first escalate our manufacturing capacity,” said engineering export promotion council.

Railways cancels contract

The railways on Thursday decided to terminate the signalling contract given to a Chinese company.

Though officials claimed that the termination was mainly due to the company’s inability to complete the project on time, the move came after 20 Indian Army personnel were killed in a fierce clash with Chinese troops in the Galwan Valley.

In 2016, the Dedicated Freight Corridor Corporation of India Limited (DFCCIL), an Indian Railways company tasked to build freight corridors, had awarded a Rs 471 crore contract to China-based Beijing National Railway Research and Design Institute of Signal and Communication Group Limited.

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The project was to install signalling and telecommunication network along the 417-km-long Kanpur-Deen Dayal Upadhyaya Junction (previously Mughalsarai) section of the Western Dedicated Freight Corridor project. Though the company was supposed to complete the project by 2019, only 20% of the work was completed in the last four years.

Since it is funded by the World Bank, the DFCCIL had written to the Bank explaining its wish to terminate the contract due to poor progress. If the World Bank refuses to cancel the contract given to the Chinese firm, the DDFC can fund the project on its own and award the contract to other company, said an official in the Railways.

Also Read: No Army personnel missing since Galwan Valley violence: Army

The railways is now planning to award this project to a domestic company, sources said.

“In view of poor progress, it is decided by DFCCIL to terminate this contract,” said the official.