Skip to main content

Heavy tariff on Chinese products to curb imports? A Trump 'solution' for India

By NS Venkataraman* 
Whether Government of India would admit or not, it is crystal clear that India is facing a war-like situation with China today.The most important thing that India needs to do now is to convey firm impression to the Chinese government that India would not buckle under pressure and military threat.  
This is what many countries in the world, which understand the tactics of China and are concerned about it, expect from India today. After all, India has to confront China on several fronts, including trade and economic front.
While China has created huge capacities in several industrial and commercial sectors, the fact is that China is excessively dependent on the world market for it’s industries to operate at economic capacity utilization level , by marketing their product internationally. This is the area where China has to be confronted.
U S President Trump has understood this and that is why he has initiated trade war with China, which is getting silent approval from several countries. Very few countries criticise USA for its trade war moves, which has made Chinese economy weaker, though not still weak at alarming level.
It is high time that India too starts a trade war with China. While there is high level of clamour amongst cross sections of Indians to ban import of goods and services from China, some “experts” have been stating that ban on the import of goods from China would nearly paralyse the Indian economy. This view is not based on facts and not based on clear understanding of the ground realities in India.
In the year 2019, China’s exports to India were $68.3 billion, while India’s exports to China were much lower level, at $17.1 billion, largely consisting of minerals and natural products.
Of the exports by China to India, drugs and drug intermediates constitute around 65% of the total import of bulk drugs and intermediates by India from various countries. Most of the import of bulk drugs and drug intermediates is avoidable, as India has enough capacity. 
For example, a number of units in India have capacities for the production of several drugs such as ibuprofen, paracetamol, metronidazole etc. and still India imports these from China, leading to under-utilization of capacity in India.
In the same way, India has adequate installed capacity for several chemicals, yet even such chemicals are being imported from China. Several examples can be readily pointed out.  India imports around 1 lakh tonne per annum of citric acid from China. Ironically, India was producing citric acid and then closed its plants due to import dumping from China.
Several Indian units such as Hindustan Antibiotics, Torrent Pharmaceuticals and others were producing Penicilin G earlier, and all of them have closed operations due to import dumping from China, and now India is largely importing these from China. 
Why is this situation? The reason needs to be understood and tackled. 
India is importing several pharmaceuticals and chemicals from China not due to lack of production capacity or technological capability, but Indian buyers are tempted by the offer of low price from China. Also, China provides liberal credit terms of as much as six months to the Indian buyers from the date of Bill of Lading, after the Indian buyer would open irrevocable Letter of Credit.
The fact is that China is a non-market economy and several hidden subsidies and support are given by the Chinese government to help Chinese industries export its products at low price, and there is no transparency in such matter.
There are enough capacities for producing drugs like ibuprofen, paracetamol, metronidazole etc., yet these are imported from China, leading to under-utilization of capacity in India
What is particularly surprising is that several buyers and traders in India succumb to the temptation of buying products from China due to low price and liberal credit terms, even if the quality and specification of Chinese products would be less than that of the products produced in developed countries.
Curbing the import of products from China is now a national necessity to protect India’s interests. There are many non-essential items imported from China such as furniture, beddings, toys, mobile phones, televisions etc., which India can do without supply from China.
In the case of chemicals, bulk drugs, auto parts etc., the capacity utilisation of Indian industries should be improved and production increased by curbing import from China. There are enough capabilities in India with regard to such products.
Even in the case of renewable energy sector, solar cells are imported from China in large quantity, while solar cell producers in India are languishing.
The Government of India should make the price of Chinese goods in India expensive by imposing safeguard duty to protect the Indian industries and national interest. With such protection, Indian industries will have the opportunity to expand capacities, increase production and optimise production cost, which they are unable to do now, as they are unable to operate with confidence due to import dumping from China.
India has to learn from the strategy of US President Trump, who has imposed tariffs on Chinese products heavily to curb import from China. China has tried to retaliate by imposing tariffs on US products. In the process, both the countries have not bothered about the regulations of World Trade Organisation (WTO) and WTO rules have gone with the wind.
India also needs to impose such tariffs on Chinese products without excessively being concerned about the WTO rules, which should be relevant only in normal times. China is occupying Indian territory and has killed Indian soldiers. In such circumstances, India starting a trade war with China is absolutely appropriate. Even as per the WTO rules, safeguard duty can be imposed on the imported product by any country, if the domestic industry would be adversely impacted.
Certainly, a trade war with India would not destabilize Chinese economy in big way, but it would cause concern to China. This would make it clear to China about India’s determination to confront China and would be a trend setter for several countries in the world who are equally concerned like India about China’s greed, ruthlessness and territorial expansionist policies.
---
*Trustee, Nandini Voice For The Deprived, Chennai

Comments

p.k.n. panicker said…
Dear Mr.Venkataraman, You are absolutely correct - but then these are subjects which we, you, me and many of our friends were voicing individually and collectively over almost four decades; a nation which depends on imports of essentials merely because they are cheap is bound to be called the price at one or other time. East vEuropean nations learned the lesson a decade or so back - USA has learned the lesson, India is now slowly realising it.
This is not to say that bilateral trade between nations are to be totally banned - nor an anti-any nation sentiment is to be cultivated. A judicious approach in relations, particularly so in matters related to trade and commerce is what is called for. Prime Ministers pitch for self-reliant economy, without prejudice to none, is perhaps the right stand for any nation to follow. Panicker

TRENDING

Australia least prepared to fight Hindu 'extremism', admits diaspora NGO group

Tiranga rally in Sydney: Cause of stir among diaspora By Our Representative  The Australian Alliance Against Hate and Violence (AAAHAV) has said that Australia is “least prepared” to counter the allegedly “rising threat of Hindu far right extremism”. Calling upon politicians, federal and state governments to “urgently recognise the threat far-right Hindu extremism”, it asks “to take concrete steps to address this threat.”

Young environmentalist's arrest 'sinister', even parents not told of her whereabouts

By Our Representative  The Coalition for Environmental Justice in India (CEJI), a civil society network, has said that it is “highly disturbing” that Disha Ravi, a young woman climate activist from Bengaluru was “picked up” in what is referred to as a “closely guarded operation” of the Delhi police. Disha, 21, has been remanded to police custody for five days after she was taken from Bengaluru to Delhi.

Mukesh Ambani's earnings during Covid 'can lift' 40% informal workers out of poverty

By Dr Gian Singh*  The Inequality Virus Report released by Oxfam, a non-profit organization, on January 25, 2021 on the growing inequalities in different parts of the world, sheds light on the growing economic, educational, healthcare and gender inequalities in India. The report has revealed that the wealth of billionaires has increased by 35 per cent during the lockdown period in the country.

US forensic revelation enough evidence to release Sudha Bharadwaj, others: Civicus

Counterview Desk  Civicus, a Johannesburg-based global alliance of civil society organisations and activists claiming to have presence in 175 countries with 9,000 members and working for strengthening citizen action, has sought immediate release of Sudha Bharadwaj, arrested in 2018 under the anti-terror Unlawful Activities Prevention Act (UAPA) and accused of having links with the banned Communist Party of India (Maoist).

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Golwalkar's views on tricolour, martyrs, minorities, caste as per RSS archives

By Shamsul Islam*  First time in the history of independent India, the in-charge minister of the Cultural Ministry in the current Modi government, Prahlad Singh Patel, has glorified MS Golwalkar, second supremo of the RSS and the most prominent ideologue of the RSS till date, on his birth anniversary, February 19. In a tweet he wrote : “Remembering a great thinker, scholar, and remarkable leader #MSGolwalkar on his birth anniversary. His thoughts will remain a source of inspiration & continue to guide generations.”

'Bird, take me flying with you too!' Being Devangana Kalita

By Ashley Tellis*  I first met Devangana Kalita in a first year English Honours classroom in which I entered to teach Charles Dickens’ Hard Times in Miranda House, Delhi University, in 2008. She was one of the smartest students in the class – Devangana smiled the most and had the brightest twinkle in her eyes of the girls in the class. A middle class girl – Kalita comes from a family in upper Assam, the Kalitas along with the Brahmins dominate Assam (the Bamon-Kolita nexus as it is called) – in an elite all women’s institution known for a feminist, rebellious history. Like all institutions, it was repressive; like all all-women institutions, particularly so. But Miranda House had met its match in Devangana. She organised, protested, all within the democratic tradition resisted. The seeds of Pinjra Tod, the group Devangana was to eventually co-found, and which now finds her jailed for as absurd a reason as inciting a ‘riot’ were already sown in that first year. By the third year, they

20% of FIRs against journalists in 2020 alone, targeted attacks in 2021 'too many to count'

Counterview Desk  Condemning what it calls “alarming rise in state repression and clampdown on news outlets and journalists” that “expose” the anti-people nature of the establishment, India's top civil society network, National Alliance of People’s Movements (NAPM) has demanded “immediate release of arrested journalists, withdrawal of arbitrary charges and protection of media persons facing threats.”

Whither right to food? Social security scheme allocation for woman, child 'reduced'

Counterview Desk Pointing out that women and children have been ignored in the Union Budget 2021-22, the advocacy group Right to Food Campaign (RtFC) has said that the Government of India should have taken into account the fact that even after the lockdown was lifted, distress among marginalized communities continues, with people having lower incomes and reduced food consumption.

NAPM extends support to Indian, Aussie citizen groups 'opposing' Adani ventures

#StopAdani action in Australia  Counterview Desk  The civil rights network, National Alliance of People’s Movements (NAPM), extending solidarity to the global campaign by the Youth Action to Stop Adani (YAStA), held in recently in Australia and India, has said that the effort was to bring more attention to the struggle aboriginal, indigenous peoples, farmers, working class and other oppressed communities against allegedly anti-people multinational corporate conglomerates.