There are nearly 86 ‘line items’ during which India is “critically dependent” on Chinese imports, and different administrative ministries should explore the likelihood of fixing domestic production facilities or diversifying import supplier base, a gaggle of ministers (GoM) has recommended.
Line items include consumer electronics, hardware , telephone equipment, electronic items, and air conditioners and refrigerators, said the GoM that was found out to market manufacturing in India. The GoM headed by Textiles and ladies and Child Development Minister Smriti Irani submitted its report back to the govt in October. India’s share in global manufacturing is at a minuscule 2.8 per cent.
China has the most important share in India’s imports — quite 18 per cent in April-September 2020. This share has risen over the last year despite the pandemic, with China managing to curb the spread of Covid-19 and keep its factories open.
The GoM report said there have been 119 tariff lines during which India’s imports exceeded $100 million annually in 2018-19. Further, imports from one country were quite 50 per cent of the entire imports of that commodity in these line items. Of these, while 86 tariff lines were dominated by China, 17 tariff lines were dominated by South Korea and 6 by Vietnam.
“These lines could also be shared with concerned (sic) administrative ministries for exploring the likelihood of fixing domestic production facilities or diversifying import supplier base,” the GoM report said.
“Furthermore, by way of identifying tariff lines where India is critically hooked in to one country for its imports, an equivalent could become the key lines for fixing and expanding domestic production capacity,” it added.
The findings of the report present the challenge the Narendra Modi government faces in pushing for India to become self-reliant or Atmanirbhar.
China’s comparative advantage in low-cost manufactured goods means India’s dependence on China may continue within the near term, especially in items like electrical machinery and equipment, albeit it could reduce imports of things like plastics and toys.
The GoM report suggested reducing imports of finished goods like refrigerators, and acknowledged how this alone could end in identifying $2 billion of components for substitution.
It has also flagged how the ‘One Nation, One Ration Card’ scheme and therefore the rollout of 5G technology could end in an exponential rise in India’s imports of point-of-sale (POS) machines and optical fiber within the near future.
“The POS machine-related imports stand at over $400 million (Rs 2,800 crore) (thermal paper + register + POS machine) in FY 2018-19. With the push under the ‘One Nation, One Ration Card’ scheme, e-POS will need to be installed at over 500,000 fair price shops as a condition for all states to access additional borrowing limits,” the report stated.
“The market is predicted to grow by Rs 5.25 billion (Rs 525 crore or $70 million). an identical opportunity was missed just in case of optical fiber cables, which witnessed a 250 per cent growth in imports thanks to high demand,” it detailed.
The GoM also suggested that high-volume low-technology products like artificial flowers and festival items should be curbed to scale back India’s import bill.