India should at once bring an import policy to ban imports or go for high tariffs to put pressure on China
The Modi Government, backed by India’s military might and diplomatic acumen, has scored a huge point by compelling China to descalate tension and withdraw its troops from the LAC in Ladakh. Whether or not the withdrawal of troops by China, after the People’s Liberation Army’s shameless and barabaric attack on unarmed Indian troops at Galwan Valley on 15 June is part of a diabolic “one step backward and two steps forward” strategy remains to be seen. In the meanwhile, Prime Minister Narendra Modi has warned, without naming Pakistan and China, that the enemies will face the fire of India’s defence forces if they challenge the sovereignty and set their eyes on even an inch of the Indian territory.
On the economic front also the Indian Governement has caused huge damage to the Chinese interests by banning a large number of their apps that had invaded the privacy of almost the entire Indian population with these apps together accounting for more than a billion downloads in India.
While India is in top gear augmenting the presence of its troops on the LAC, what’s giving extra leverage to the Indian cause is the remarkable support India is getting from major world powers, including the USA, France and Russia.
In this backdrop, the social media is also packed with all kinds of messages – some from the Modi baiters, whose interests remain hinged to the fortunes (oops misfortunes) of the Congress party or the communists and the Jihadis who did everything to keep Kashmir on boil and when they realized that they had lost it all with the abrogation of special status to J&K under Article 370, they did everything they could to draw international attention by raking up the issue of the Citizenship Amendment Act (CAA) and National Register of Citizens (NRC) and masterminding violent riots coinciding with the US President Donald Trump’s India visit earlier this year.
The opposition notwithstanding, those for the national cause and the supporters of the Prime Minister have remained in full command of the situation while defending India’s rightful position vis-a-vis China on the social media.
There are also some who are even going overboard in this matter. For example, one came across a post earlier this week on Whatsapp by some one introducing himself as an importer of computer accessories from China. He wrote:
“Recently Indian government has created enormous pressure on the economic front and the Government of China
Last 30 days , all the containers which have arrived from China, we’re not allowed to get them custom cleared.
The containers are getting piled up in Container Depots.
Let me inform you that We buy goods from chinese suppliers just by tendering 10 to 15% advance, because of our long term relationship .
The chinese suppliers trust indian importers very much.
But we have to remit the balance 85% payment to the Chinese suppliers prior to taking containers delivery at port…
Otherwise we dont get the documents and we cannot get delivery of our containers. So 85% payment of chinese containers is on hold .
Last 25 days no custom clearance is being done for chinese containers which has arrived in India.
This is being done unoffically and custom officers have informed the indian importers to wait for 30-40 days.
So last 25-30 days no containers on any port in India had been cleared.
This has led to non-payment of crores and crores to be paid to the chinese suppliers.
As the custom clearance has been put on hold, a huge amount of money to be paid to the Chinese suppliers has got stuck.
The chain effect is the Indian importers have asked their Chinese suppliers to stop the delivery of further containers.
The goods that are lying produced in chinese factories are not being loaded to india.
Chinese suppliers cannot dispatch any container from China henceforth.
So now since the goods which have been manufactured in the Chinese factories are not being dispatched from China, there is economic turmoil in their economy.
The suppliers are getting mad.
They are not able to pay the interest to the government banks and further their factories are closed because they cannot go for any further production as the Indian importers are not placing any new orders to the Chinese suppliers.
So this is a massive massive blow to China on the economic front and China has realised the gravity of the situation.
Producers in China are literally mad and their cheques are bouncing.
There loan installment payments are on default and they are not able to pay the salaries to their employees.
This has given the message to the Chinese Government that India can ruin the economy of China just by stopping the imports.
I am sure this will help a lot on the negotiating table and will force China to withdraw from encroached LAC areas.”
Such projections, aimed at building euphoria, easily go viral. The problem is that they not only over-simplify matters but also play the negative role of misleading the less-informed and gullible. In this regard, what should not not be lost track of is the fact that most of the import of goods from China is paid in advance. Once containers start piling up, the only beneficiaries are the container freight stations that charge a huge demurrage. This is just like shooting oneself in the foot. Therefore, putting euphoria aside, it is important for those holding responsible positions in the government to sit up straight and clear all pending consignments. The Government of India also should bring an import policy either for banning the imports or imposing high tariffs to put pressure on China.
Even before India got engulfed in the Galwan crisis – a result of military misadventure by expansionist China – The latest Union Budget sought to increase customs duties on a range of products keeping in mind the “Make in India” initiative. Significantly, the Budget also made the stand clear that imports under free and preferential trade agreements (FTAs and PTAs were to be tightened under the new provision of Section 28DA of the Customs Act. A corollary to this was India’s decision in November 2019 to completely drop the idea of joining the Regional Comprehensive Economic Partnership (RCEP), especially due to concerns over Rules of Origin (RoO). This development is significant as it comes in the backdrop of the active role played by former Chairman Central Board of Excise and Customs Najib Shah, who was closely associated during Modi 1.0 with the implementation of the WTO Agreement on Trade Facilitation which is aimed at easing of customs norms to boost global goods trade.
In the midst of the present high voltage situation, there are many experts who are of the view that harsh action with regard to imposition of tariffs or banning of import of goods from China will be counter productive. A principal votary of this argument is Mohammed Saquib, Secretary General, India China Economic and Cultural Council. As India imports both capital goods like machines and components and consumer goods like smartphones and televisions in a big way from China, Saquib has been quoted in a report pointing out that India’s action regarding tariffs and trade barriers with relation to China is going to be a major challenge.
Newsroom24x7 has been writing continuously on issues linked with India’s trade with China.
APRIL 14, 2015
A close look at the findings of a Government of India Authority, leads to the obvious inference that an import racket has been operating in India in collusion with exporters in China and as a consequence domestic industry has suffered losses and big money that should have been collected by the Government of India as customs duty has been pocketed by unscrupulous importers who have been hoodwinking the system for a long period of time. Click link to read more…
AUGUST 6, 2015
The Central Board of Excise and Customs (CBEC) is going in for a 360 degree profiling of top 20 commodities in terms of valuation, duty rates – both with regard to manufacturing and imports to enable policy intervention and leveraging the Tariff Policy as a key component of Prime Minister Narendra Modi’s flagship “Make in India” Programme. Click link below to read more…
OCTOBER 3, 2016
If the Indian Government succumbs to global pressure or has no choice but to maintain the status quo in terms of tariffs on goods imported from China due to bilateral commitments or the WTO’s new Trade Facilitation Agreement (TFA), which India ratified earlier this year to meet the lofty goal of increasing merchandise exports or further boosting the country’s economic growth by “reducing trade costs and supporting its integration into the global economy” as summed up by WTO Director-General Roberto Azevêdo, the people of India can come forward and play a pro-active role by resorting to en masse boycott of Chinese goods. Click link below to read more…