The government may resume elaborate physical inspections of Chinese imports because.
It suspects large-scale dumping of finished Chinese products in the garb of raw materials and intermediates, people familiar with the matter said.
Chinese imports surged by 34% to over $78.5 billion in first eight months of 2022 even as India’s exports to China plunged 37% to $12.6 billion, the people added.
There is a need to restart detailed physical examination of consignments emerging from China or third countries, the people said requesting anonymity. It was in mid-2020 that India stopped such examination, giving in to demands from Indian companies.
And traders who complained of delays arising from the customs department inspecting every Chinese shipment. To be sure, given the sharp recovery in India’s economy, and a revival of manufacturing activity, it is only natural that Chinese imports of raw materials and intermediaries have increased — although the magnitude of increase has alarmed the government.
In addition, the government fears that Chinese imports are coming into India from other countries.
“It is also suspected that Chinese goods are being re-routed to India from third countries with which New Delhi has free-trade agreements (FTAs). There is information about Chinese goods getting concessional duty access to the Indian market without any value-addition in the third country. It is happening in collusion with some unscrupulous local businessmen. The matter is being probed,” one of the people, a government official, said.
The people mentioned above said influx of garments, plastic products, suitcases, handbags, furniture, household items, electronic goods, mechanical and electrical products are major concerns also because it negates India’s Aatmnirbharat Bharat Abhiyaan (Self-reliant India initiative).
The ministries of commerce, finance, the Directorate General of Foreign Trade (DGFT) and the Central Board of Indirect Taxes and Customs (CBIC) did not respond to an email query on this matter.
According to the latest data released by Beijing, India-China bilateral trade in the first eight months of current calendar year has already crossed $91.19 billion, a 16% year-on-year jump with trade heavily tilted in favour of Beijing. While China is exporting goods worth $78.57 billion to India during this period (about 34% y-o-y growth), its import from India fell sharply by 37% to $12.62 billion.
Indian official data available up to the first seven month of 2022 corroborate the trend. India’s imports from China through official channels surged to $61.29 billion in January-July 2022, a 29% jump compared to $47.52 billion in the same period previous year. With the latest preliminary data for exports to China up to August, India’s exports to China plunged sharply by 35.6% at $6.8 billion in January-August 2022 period compared to $10.5 billion in the same period previous year.
One reason for this is dumping, a second person alleged.
“ Chinese dumping has changed the trend from last year — from low-value goods to high-value products; hence significant impact in the dollar terms. If this trend continues, this year we may cross $100 billion Chinese imports,” this person added. According to official data of India’s commerce ministry, India-China bilateral trade jumped to $110.7 billion in 2021 (calendar year) with Chinese imports surging 49.3% (yoy) at around $87.65 billion.
Pradeep Multani, President of PHD Chamber of Commerce and Industry (PHDCCI), said: “Imports from China have changed from low-value, low-cost products like toys and crackers to high-value items like electronics. Unfair competition from imports from China had a severe impact on the growth prospects of domestic manufacturers, especially small businesses.”
“Further, a check on dumping of finished Chinese goods in India is strictly required. Efforts should be made to make country of origin rules tougher, so that Chinese origin products cannot enter via other countries,” he said.
Arpita Mukherjee, professor at Indian Council for Research on International Economic Relations (ICRIER), a think-tank, said: “There are two issues here. First, if there is dumping we need to check the products, their tariffs and then seek trade remedial measures as per the WTO norms. Second, there seems to be some issues in the Customs risk management system and we need a technology driven robust risk management system with limited scope for manual interventions. Both of these need to be addressed.”