In a move to reduce the dependence on Chinese imports, India is reviewing the trade pacts with China. According to Sources, “The routing of Chinese goods to India through their common trade partners, inversion in duty structures and the exploitation of ambiguities in origin rules have all come under the government’s scanner”.
The Ministry of Commerce and Industry is compiling the data related to installed capacities of local industry for goods that are traded under free trade and bilateral agreements and products that face issues related to invested duty structures, for review. MCAI wants to analyse these agreements to find out if they are leading to preferential rates being lower on finished products than the intermediate or raw materials.
India primarily exports raw materials or primary goods while it imports intermediate and finished goods.
Special focus will be on scrutiny of trade agreements with South Asian Countries under the South Asian Free Trade Area (SAFTA), the Asian group, and bilateral pacts with Singapore, Japan, South Korea and Sri Lanka. And the exercise will be aimed at fixing the loopholes that aid Chinese imports. India believes that these trade pacts are giving leverage to China to import goods in the country through facilitated trade routes under the pacts.
India is solemnly scrutinising the Asia Pacific Trade Agreement which is the only operational trade agreement linking the two countries. An official said, “There is a suspicion of circumvention of free trade agreements (FTA) and Chinese goods entering through these routes violating rules of origin norms”.
India’s trade deficit with China was nearly $47 billion in the first 11 months of fiscal 2020 which is a significant matter of concern. An official said, “We are looking at ways to curb the import surge as this cripples the domestic installed production capacity”.
According to an Industry Executive, “China has been pumping investments in Vietnam and its imports into India are coming unchecked, that too at a low duty, through such countries”.
A matter expert has said, “One can only imagine the plight of our domestic industry had India joined the Regional Comprehensive Economic Partnership. Even thinking of these measures would not have been possible in that case”.