Chinese dumping via Nepal, Lanka.

Taking advantage of low duty tariffs, China is increasingly using countries like Nepal and
Sri Lanka to dump its products in India.

If China’s 'indirect' export is accounted, it will further accentuate existing huge trade imbalance between India and the neighbouring country with odds favouring China. India has trade agreements with both Nepal and Sri Lanka and some products enjoy zero duty or marginal duty status and China is exploiting the low tariffs to push its products in India. There is huge deficit of over $23 billion in trade between India and China. India’s total imports from China in 2008-09 was $32.497 billion while its exports there stood at $9.353 billion. Trade experts cannot quantify a figure to project China's indirect export to India. China exports finished and value added product to India while it imports primary goods.

India’s total import from Nepal in 2008-09 was $1.914 billion and export was $1.570 billion. While India’s import from Sri Lanka in 2008-09 was $0.356 billion and export was $2.425 billion.

Experts say China is using Nepal in a big way to flood Indian market with its products. “India’s terms of trade with Nepal are much relaxed as compared to other countries. It is easier to flout rules. For example, a few years back we had noticed that Nepal is exporting huge amount of batteries to India. The total export was much more that total battery production in Nepal. Which implies that a third country is using Nepal as a transit point to send its goods to India,” Ajay Sahai, director general, Federation of Indian Export Organisations, said. Rajiv Anantram, senior fellow, Indian Council for Research on International Economic Relations agreed. He said: “A lot of trading activity is done by China through Nepal. It is mostly done under the table and it is not very explicit. But Nepal’s manufacturing capability is well known. It does not have high level of manufacturing expertise. China uses Nepal as a transit point to send its goods to India.”

Nepal’s major exports to India during 2008-09 were of iron and steel, spun yarn, plastic material, and non-ferrous metals (4.38%), among others. India’s major exports to Nepal during 2008-09 included those of petroleum (crude products), primary and semi-finished iron and steel, transport equipment and machinery.

India has free trade agreement with Sri Lanka. However, to enjoy lower duty concessions, exporters from Sri Lanka have to follow rules of origin. They have to make minimum value addition of 40 per cent in the goods before sending the goods to India to enjoy duty concession.

China has been pushing for free trade agreement with India, but India has refused this as Chinese goods with lower duty might drive domestic companies out of competition. “Chinese exporters get duty benefits and subsidies from the government to keep their costs low. They have a long-term plan of conquering the market. They do not worry about short term losses,” said Anantram.

Mohammad Saqib, secretary general, India China Economic and Cultural Council said there have been complaints from Indian importers about Chinese products infiltrating Indian market through Nepal and Sri Lanka but one should not blame that country for this.

He said: “It is the fault of our customs authorities if Chinese goods reach India through Nepal and Sri Lanka. This only means that customs officers are not making due diligence while clearing goods consignments. Domestic importers are also to be blamed for buying such products. China is not at fault.”

Source : mydigitalfc.com