India is considering a series of tariffs and non-tariff steps to reduce imports of non-essential consumer and electronic goods, including goods from China, as the trade imbalance concerns policymakers, two government officials and an industry source.
As many as 18 key government ministries, led by the federal commerce ministry, met last week to confirm steps aimed first at reducing imports from China, which account for nearly a third of India’s trade deficit, said three sources, who declined to be named.
India has been trying to reduce its trade deficit with China since 2020, when border tensions flared along the disputed border, but with little success as the country is a key and low-cost supplier of goods including active pharmaceuticals, electrical equipment and several chemicals.
The trade gap with China widened by 28% in April-December 2022 compared to the same period a year earlier, as India’s domestic demand continued to support Chinese imports while China’s COVID-19 lockdown curbed imports from India.
The government is considering stepping up investigations to root out unfair practices in a “wide range” of imports from China and elsewhere, one of the officials said, without specifying which goods or the unfair practices involved. An industry source said anti-dumping investigations this year targeted products such as printed circuit boards and a type of tempered glass imported from China.
If the trading partner was found to have engaged in unfair practices, safeguards such as the imposition of anti-dumping duties would have to be put in place, the official said. India’s federal commerce ministry and the Chinese embassy in Delhi did not immediately respond to requests for comment.
India’s total merchandise exports fell 12% in December from a year earlier, while merchandise imports fell 3%, widening the deficit by 13%, government data showed. Officials said India will also step up checks on imported goods to ensure they adhere to national quality standards, two government officials added.
The government could highlight a widening trade deficit as the main downside risk to India’s economy in its economic survey heading into the new fiscal year from April 1. The government is also likely to detail some steps to tackle the problem in the February 1 budget.
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