Is there a large-scale operation against Chinese goods in India? The latest Quality Control measures initiated by the Department of Promotion of Industry and Internal Trade (DPIIT) lead to a presumption that India’s economic sanctions against China are in full swing. While it seems incongruous given the fact that our trade numbers are rising, the micro-level analysis tells an altogether different story. Producers of lots of Chinese products will be in jeopardy in the days to come in India.
More products under QCO
The Department of Promotion of Industry and Internal Trade (DPIIT) has launched one more round of embargo against China. DPIIT is planning to bring 16 more products under the ambit of a Quality Control Order (QCO). As soon as it becomes effective, companies producing these products will have to subscribe to a higher level of quality, if they want Indian consumers to buy their products. Goods under the scanner are air coolers, bicycles, bottled water dispensers, pumps, door fittings, cookware and utensils, electrical accessories, communication cables and water meters among others.
The DPIIT has mandated that “All the industry, apex industry/ associations, sectoral industry/ association, regional industry/ association, respective administrative ministries, concerned R & D institutions/ organisations are advised to furnish their response on the draft QCOs to the department by January 15.” Besides, Modi Government’s impetus on home-made toys and accessories has dealt a blow to the toy manufacturers in China.
A general embargo cannot be imposed on Chinese imports
A quality control order is a legitimate way to control imports of detrimental effects from flooding the market. This is like a slow poison to the problem of dumped imports flooding Indian markets. Most of the low-grade imports with toxic ingredients come from Beijing-based establishments.
The crucial factor behind the Chinese products winning the race is the price tag with their Indian counterparts. Traditionally, China had a comparative advantage of cheap labour along with a dictatorial regime enforcing unlimited working hours. The cost of garbage raw materials has traditionally been so cheap that even the cost of transportation is not a hindrance to its price competitiveness.
Now, the hindrance for Indian policymakers is that they just cannot put an embargo on Chinese imports. Modern multilateral trade rules designed for laissez-faire prohibit it. However, at the same time, WTO does provide for Technical Barriers to Trade (TBT). It asks its member states to ensure that technical regulations, standards and conformity assessment procedures apply to both local as well as foreign companies. In other words, India can ask foreign companies to sell the same quality of products as local companies are producing.
India’s continued battle against made-in-China products
For the last few years, India has become proactive in waging an undeclared war against Chinese imports. Steel imports became one of the first casualties. In January 2020, the Modi government’s stringent directives for BIS certification for both imported and locally made steel tubes, tubular and other wrought steel fitting, steel tubes for structural purposes and water wells have impeded upon unabated substandard Chinese steel products, art the same time it has assisted in improving the quality of indigenous goods. Further in May 2020, QCO was extended to galvanised steel sheets, carbon steel cast billet ingots, cold rolled non-oriented electrical steel sheets and strips, fire-resistant steel and stainless-steel wires.
A month later, Economic Times reported that the government had zeroed in on 5000 technical regulations to curb imports of industrial goods, telecom products, electronics, steel and chemicals. In a phased manner, these regulations were slated to be applied to 370 products. Following the Galwan valley clash process was accelerated and in July 2020, the then Consumers Affairs Minister Ram Vilas Paswan informed that 368 products were already under QCO while 239 others were in the pipeline.
Flared sentiments against Chinese products helped in reducing the trade imbalance
Soon, there were flared public sentiments to boycott Chinese products which brought considerable impact on the Indo-China trade basket. There is a noticeable decline in the import of finished Chinese products and it is apparent during festive seasons like Diwali. Side-by-side, the government has also ramped up its efforts by bringing 50 more products under the regulation scanner by the end of the second quarter of FY 2023-24.
The steps are commendable and are ensuring a level playing ground between Indian and Chinese products. The final result is yet to be seen, though the beginning is commendable.
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