Reuters reports from New Delhi.Two government officials and an industry source said that India is thinking about taking a number of tariff and non-tariff steps to cut imports of non-essential consumer and electronic goods, including those from China. This is because trade imbalances worry policymakers.
According to three unnamed sources, as many as 18 important government ministries, led by the federal trade ministry, met last week to decide on first steps to cut imports from China, which make up nearly a third of India’s trade deficit.
Since 2020, when border tensions rose along a disputed border, India has been trying to cut its trade deficit with China. However, it hasn’t been very successful, since China is a key and cheap supplier of goods like active pharmaceutical ingredients, electrical equipment, and several chemicals.
From April to December 2022, the trade gap with China grew by 28% compared to the same time period the year before. This is because India’s domestic demand kept supporting Chinese imports, while COVID lockdowns in China cut down on imports from India.
One of the officials said that the government is thinking about stepping up investigations to get rid of unfair practices on a “wide range” of imports from China and other places. He did not say which goods or practices were unfair.
So far this year, anti-dumping investigations have focused on things like printed circuit boards and a type of toughened glass that comes from China, according to a source in the industry.
The official said that if a trading partner was found to have done unfair things, it would be necessary to put in place protections, such as anti-dumping duties.
When asked for a comment, India’s federal trade ministry and China’s embassy in New Delhi did not answer right away. China’s Ministry of Commerce also had nothing to say right away.
India’s exports of goods fell by 13% in December compared to the same month last year, while imports of goods fell by 3%. This made the trade deficit 13% bigger.
The officials also said that India would check imported goods more closely to make sure they meet national quality standards. This was said by two government officials.
Last week, Reuters said that the government could mention the growing trade deficit as a major downside risk to the Indian economy in its Economic Survey for the new fiscal year starting April 1.
The government is also likely to explain some of the steps that will be taken to solve the problem in the budget that will be released on February 1.