India’s Department of Promotion of Industry and Internal Trade (DPIIT) is soon going to issue Quality Control Orders (QCOs) for some more products like ceiling fans and smart meters. The aim is to check the quality of products being imported or produced in the country. This order is believed to be another step to control the increasing imports from neighbouring country China and a way of becoming more independent.
According to a report published in the Business Standard, India’s import of ceiling fans jumped 132 per cent to an estimated value of $6.22 million in the Financial Year 2021-2022. Out of which, import from China was worth $5.99 million. At the same time, the import of electricity smart meters was worth $3.1 million, of which about $1.32 million worth of products came from China.
In the year 2020, the department brought QCOs for a host of goods such as household refrigerating appliances, certain steel and cable items, toys and bicycles’ retro-reflective devices. The products under these orders cannot be produced, sold/traded, imported or stocked without the Bureau of Indian Standard (BIS) mark.
After three years of these orders being issued, toy imports have dropped by 70 per cent, from a worth of $371 million in FY 2018 - 2019 to worth $110 million in FY 2021-2022. During this time period, imports of toys from China dropped by 80 per cent to worth $59 million. In addition to this, the Indian government also banned hundreds of Chinese apps after a border clash with China in June 2020, which killed 20 Indian Soldiers and several PLA soldiers.
Furthermore, demands have been raised from time to time by the Indian public to ban Chinese products or stop imports from China. Prime Minister Narendra Modi’s vision of an ‘Atmanirbhar Bharat’ fired up the ‘boycott Chinese products’ movement, which took on a new direction after the Galwan border clash in 2020. However, the current trade status shows that a ban on Chinese Products or an embargo on bilateral trade might have a negative impact on India, given that the Indian Trade Balance with China is unequal, which means India imports more from China than it exports to the country.
Moreover, China still remains the largest source of critical imports for India, from electrical and mechanical machinery to a range of chemicals used by various industries. In addition, they also import auto components and pharmaceutical ingredients etc. What is more, after the spread of Covid in 2020, a large number of medical supplies are also being imported from the neighbouring country. The products made in China have reached almost every household as they are providing high-tech features on a low budget. A lot of businesses and tradesmen depend on India-China business.
Last year India’s imports fell 10.8%, the lowest it has been since 2016. Additionally, the two-way trade in 2020 reached $87.6 billion, which is down by 5.6%, while the trade deficit also declined to a five-year low of $45.8 billion, reports The Hindu. Additionally, more than 200 apps remain banned and Chinese firms have been kept out of 5G trials so far. The government has also tightened scrutiny on Chinese firms in India. Recently tax investigations were conducted on companies including Xiaomi (a smartphone manufacturer).
Although the Minister of Commerce and Industry in India Piyush Goyal informed the parliament in July 2022 that India has not imposed any country-specific ban on imports. The new orders are somewhere pointing towards the same motive. Experts believe that New Delhi is considering a long-term plan to reduce some of these import dependencies. This can be achieved if the government supports local manufacturing industries and enables them to capitalise on economies of scale to offer lower prices with better quality.
As part of this move, the Indian government has implemented policies to promote domestic manufacturing like the Production Linked Incentive (PLI) schemes, Startup India Initiative and ASPIRE, etc. India needs a variety of elements in the markets in order to increase its self-reliance. It is still worth noting that China might not be affected by the boycott but Indian markets might be adversely affected due to disrupted supply.
Image Credit: SME FUTURES
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