India plans list of substitute nations for critical imports

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New Delhi: The government is working on a list of alternative countries that could be suppliers of critical components that cannot currently be manufactured domestically, officials said.

“DPIIT (Department for Promotion of Industry and Internal Trade) is working with the industry to line up a list of low-quality imports from China. The next step is to substitute them, internally or externally,” a government official told ET. “The engagement looks to firm up tariff and non-tariff measures to curb imports of raw, intermediary and finished products from China.”

Once DPIIT is ready with the list, the government will reach out to countries and work out ways to incentivise supply to the Indian market, even as it tries to encourage domestic manufacturing of the goods, officials added.

The move is a part of a large exercise undertaken by the government to relook the Free Trade Agreements to ensure cheap Chinese products do not flood the Indian market, establish stringent quality controls that would disqualify a host of Chinese imports, and incentivise producers to relocate production to India — boosting manufacturing and exports under likes of the production-linked incentive scheme.

“The government is cognisant of the fact that dependence on China cannot go away overnight…There is an overall focus on a calibrated effort to discourage imports from that country, by sourcing them from other destinations, even as India tries to ramp up its manufacturing abilities,” another official said.

The official added that Southeast Asian countries, along with Japan and South Korea, have emerged as possible destinations, but the comparative price factor vis-à-vis India remains a concern.

“For non-critical sectors like textiles, electronics, we should look for new sources in Southeast Asia as there is not much difference in respect to labour cost arbitrage. At the same time, we should take more and more sector-specific measures to make our small and medium enterprises produce them in a competitive manner,” said Bipul Chatterjee, executive director, CUTS International, a global public policy think-tank promoting consumer welfare through trade, regulations and governance.

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Tagged bpycott china, domestic manufacturing, dpiit, India china imports, quality imports, the free trade agreements

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