Govt plans to cut import dependence

The authorities is engaged on a sectoral technique to scale back import dependence by constructing native capability, creating worth chains and rapidly attaining self-reliance in at the very least half-a-dozen areas starting from footwear and furnishings to technical textiles and medical gear to electronics and defence manufacturing, folks conscious of the event mentioned.

The sectors will obtain fiscal incentives credit score help and tariff safety from an inflow of cheaper imports, significantly from China, the folks mentioned, requesting anonymity.

“All custom duty exemptions would be comprehensively reviewed and many of them will go as they are hurting domestic manufacturing. A view on this is expected by the end of this quarter [FY-2021],” one of many folks, who works for an financial ministry, mentioned.

The sectors are being recognized fastidiously on the premise of availability of provide chains and expert employees, in addition to their potential to create job alternatives, the folks mentioned.

Prime Minister Narendra Modi has spelled out a imaginative and prescient for an Aatmanirbhar Bharat (Self-Reliant India) because the nation battles the coronavirus pandemic and subsequent lockdown that’s anticipated to trigger an financial contraction this monetary yr. India has additionally been involved concerning the dimension of its commerce deficit with China, a priority that has been accentuated by this month’s army faceoff within the Galwan valley in japanese Ladakh.

The stability of commerce between India and China is vastly tilted within the favour of the latter. According to current commerce figures launched by the General Administration of Customs of China (GACC), India’s commerce deficit with China was $56.77 billion in 2019. Bilateral commerce between the 2 international locations was about $92.68 billion within the yr.

“The government’s strategy is a combination of its ongoing Make in India policy and Atmnirbhar Bharat Abhiyan (Self-reliant India Initiative). It should not be seen as a reaction to the Chinese misadventure at the border,” the primary particular person mentioned.

Relations between New Delhi and Beijing have soured after China’s People’s Liberation Army engaged with the Indian Army in a brutal brawl on the Galwan valley on June 15, resulting in the lack of 20 Indian personnel. The unprovoked Chinese aggression has triggered requires a boycott of Chinese items.

“The policy to reduce import dependence predates the recent Chinese aggression. The finance minister did mention it in her budget speech. However, a popular sentiment against Chinese imports [after China’s recent aggression], will certainly also help us in our objective,” a second particular person, who advises the federal government on commerce points, mentioned.

While presenting the Union funds on February 1 this yr, finance minister Nirmala Sitharaman mentioned the unhindered imports of products beneath free commerce agreements (FTAs) had been hurting home industries, significantly MSMEs and such imports required stringent checks.

The authorities can be contemplating persuading massive industries to make use of domestically produced uncooked supplies similar to metal. “This is the policy even in some of the developed countries where Indian MNCs own automobile companies. The automakers are told to use locally purchased steel,” a 3rd particular person, who works within the metal ministry, mentioned.

“The government is taking measures to curb dumping of steel and steel products that are sub-standard in quality,” he added. The ministry has already issued a directive for state-run companies asking them to desire domestically manufactured iron and metal merchandise.

Experts mentioned the federal government’s sectoral technique was a step in the suitable course, however import curbs needs to be calibrated to keep away from any abrupt disruption in provide.

“Yes, a sectoral strategy is the only way to reduce dependence on imports. India should immediately consider sector-based clusters, on plug and play model,” Mohit Singla, chairman of the Trade Promotion Council of India (TPCI), mentioned.

The imaginative and prescient of an Atmanirbhar Bharat can be achieved regularly, DK Aggarwal, president, PHD Chamber of Commerce and Industry, mentioned. “Imports need to be reduced gradually in a phased strategy,” he mentioned including that the cost-competitiveness of Indian companies needs to be enhanced.

Ram Singh, a professor on the Delhi School of Economics, mentioned India has the potential to change into self-reliant, however in some sectors its manufacturing was critically depending on Chinese imports.