A staggering trade deficit of $51 billion with China has prompted the government to conduct a study on the impact of Chinese imports and the extent to which they have displaced domestic production.
The commerce ministry will also seek to identify Chinese products that can be substituted competitively by domestic products through this in-depth study for the period between 2007-08 and 2016-17.
There will be specific emphasis in the study on sectors like steel, urea and other chemicals including pharmaceuticals, electronics, telecom and consumer products of mass consumption.
"The study will estimate the impact of Chinese imports on employment generation," an official aware of the development said, adding that the government will hire an external consultant to do the analysis.
Last week, the European Union ruled to check excessively cheap imports, as it flagged China for special attention, reasoning its economy is distorted by the state. It could mean more anti-dumping action against Chinese imports into the European Union.
This would encourage other countries as well to take action against very cheap Chinese goods that have flooded their markets. Among developing countries, India's trade with China has witnessed a steep rise with bilateral trade increasing to $71.4 billion in 2016-17 from $70.7 billion in 2015-16 and China replacing the US as the biggest trade partner of India.
However, the surge in India-China trade has been lopsided as it has been primarily driven by phenomenal surge in Chinese exports to India.
In contrast, India's exports to China have not grown much due to which the trade gap ballooned to $51billion in 2016-17.
Serious concerns have been raised about the growing trade deficit with China especially as it has hurt India's domestic manufacturing. "A large trade deficit with one particular country is of concern if the surge in imports is due to uncompetitive imports," the official added.
Hence, the government will identify imported products from China, which are significant in import value for India but are globally uncompetitive and can be substituted through domestic production or alternate imports.
The study will also establish if these imports are substituting domestic production instead of complementing them or they are competitive and being used as intermediates for value addition. For specific product groups, it will also map out the entire value chain from import to ultimate utilisation and consumption needs.
Source: economictimes.indiatimes.com