ALARMED at its widening trade gap with China, the Union government has been forced to consider a set of measures to curb imports from the land of the dragon.
While the Commerce Department has devised a "China strategy" that calls for higher tariff on most Chinese goods, while proposing a complete ban on specific items like power and telecom equipment, it also proposes making it mandatory for Chinese companies to tie-up with Indian firms before being allowed to import heavy equipment and machinery into the country.
The need for these measures was felt after India’s trade deficit with China, its biggest trading partner, soared 160 per cent to $23.9 billion in the last five years to 2010-11. Trade deficit is the gap between what is imported and exported and a rise in the spread indicates India's growing dependence on China.
While imports of Chinese goods have climbed to $ 43.5 billion in 2010-11 from $17.5 billion in 2006-07, exports have lagged far behind, growing to just $ 19.6 billion from $ 8.3 billion over five years.
Indian officials point out that even though China recognizes the trade imbalance as a problem, it has done little to address the issue.
The callousness displayed by China, says a senior Commerce Department official, has forced the government to devise measures aimed at curbing imports and boosting exports of value-added products. He added that the views of the Ministries of Finance, Power, Telecom and Home would also be taken into account once the strategy is in place. The Department also plans to substitute Chinese goods with those from South Korea and Japan where tariff barriers are low.
Source : Exim News Service - NEW DELHI, Nov. 2