In a bid to reduce the dependence on China for critical imports, the Modi government has coming up with a plan to look for alternatives that can replace China in supplying critical components to the country. According to the reports, the Union government has decided to draw a list of countries that can act as suppliers of critical components which are not manufactured in India currently.
The Department of Industry and Promotion of International Trade (DPIIT), under the Ministry of Commerce, is working to draw up a list to substitute the low-quality imports from China by importing from other countries or manufactured locally. India will reach out to the countries once the list is ready and plans to enable easier access to these products to the Indian market.
The Modi government has concluded that the dependence on cheap Chinese imports cannot be substituted in a short span of time and thus looking for alternative markets such as South Korea, Japan, Taiwan for imports of certain products.
The Modi government is looking for a calibrated approach to replace Chinese imports with importing from other friendly countries from till India ramps up its own manufacturing capabilities.
Modi government scrutinizing FTAs
Reportedly, the fast-tracking of such critical decisions at the backdrop of Modi government scrutinising various Free Trade Agreements (FTAs) with countries which have similar pacts with both India and China. The government has decided to relook at the trade pacts after China began to misuse these to access Indian markets and inversion of Indian duties.
The government is carefully re-looking at FTAs such as the South Asian Free Trade Area (SAFTA), ASEAN, bilateral pacts with Japan, Singapore, to check for loopholes that make it easier for Chinese imports to reach India without following the due duty structure. It is believed that China is routing its goods to the Indian markets by making use of these agreements.
The government is also reviewing the Asia Pacific Agreement (APA), which directly links India and China, South Korea, Bangladesh, Laos, and Sri Lanka. This move will allow India to ensure that cheap Chinese products are not allowed to flood Indian markets.