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Business and Barbs

Wartime rivals India and China are now close business allies. But allegations are flying as cheap Chinese goods flood markets such as this Delhi arcade. Gaurav Choudhury reports. See Graphics

business Updated: Sep 11, 2009 01:44 IST
Gaurav Choudhury

Here they are in the heart of Delhi, a maze of narrow corridors and shops where clones of the world’s sophisticated inventions can be bought after a good haggle: palm-sized iPods, sleek touch-mobiles, glitzy wristwatches.

Don’t let the image mislead you. It’s a theatre of war.

The 900-odd shops in the Old Lajpat Rai market are filled with cheap unbranded Chinese goods, as are thousands of markets across India, part of the same onslaught of consumer goods that China made across the world, and is now threatening millions of Indian craftsmen, businessmen and traders.

“The audio clarity in a Chinese mobile handset is even better than a Nokia phone,” said Narender Kumar, who runs a retail outlet of mobile handsets at the crowded market in Old Delhi.

“About 90 per cent of the phones we keep are made in China,” he said, pulling out a Sycee Tong mobile phone that resembles a Nokia 6300 in shape and features. “While the Nokia set would cost Rs 7,000, the Chinese is priced at Rs 2,000.”

All that has made China — which fought a war with India in 1962 — its largest trading partner and the single largest source of imports, with a share of over 10 per cent of India’s total imports of $287.75 billion in 2008-09.

From Barmer to Bangalore, thousands of Chinese engineers, computer hardware professionals and even unskilled workers are also working in India. And Indian companies like NIIT and Infosys are swiftly becoming the backbone of China’s computer software ambitions, with dozens of centres sprawling the nation.

It is an economic relationship that is soaring. One is the world’s factory, the other the global back-office. The two neighbours, housing nearly 37 per cent of world’s people, are also the hottest growth economies.

If China sizzled with a 9 per cent growth in 2008, India grew at 6.7 per cent — at a time when the US, EU and Japan were reeling under recession.

And yet, it is a relationship fraught with disputes, some niggling, some serious.

India is trying to crack down on the flood of counterfeits and cheap products using globally agreed-upon laws to prevent dumping, a manufacturer in one country exporting a product to another at a price below what it charges in its home market.

China has accused India of adopting anti-trade measures, allegations New Delhi denies. In turn, it has blamed Beijing of imposing non-tariff barriers to prevent access to its market.

There have also been instances of Chinese firms selling medicines under the “Made in India” label in Africa.

In June, the Nigerian Government Drug Regulatory Authority seized a large consignment of fake anti-malarial generic drugs labelled “Made in India” but allegedly produced in China, said an Indian commerce ministry official who declined to be named as he is not authorised to talk to the media. The tablets could have affected some 6,42,000 customers.

China remains out of bounds for Indian basmati rice exporters. India also believes that the Chinese government is blocking entry of fruits and vegetables on grounds not necessarily economic. New Delhi had sought market access for 17 fruits and vegetables including mango, guava and pomegranates. Only three have been allowed.

This year, India has so far launched 38 anti-dumping investigations over goods as varied as sodium nitrite, sodium carbonates, tyres and even the seemingly innocuous Vitamin C drug. As many as 22 of these pertain to products originating in China.

India has also put quality restrictions on mobile phones, dairy products and toys in a measure primarily aimed at blocking the flood of cheap imports from China.

India’s Directorate-General of Foreign Trade said mobile handsets without the International Mobile Equipment Identity number, which helps authorities track the sale and use of the phones, can’t be imported.

While no official estimates are available, industry sources estimate that close to one million such phones enter India every month from China.

China’s Ministry of Commerce (MoC) has expressed “serious concerns” over India’s intensive trade probes.

“China hoped that India could show prudence and restraint in using trade remedies... it could pose a threat to bilateral trade,” MoC said in its web site.

India shrugs off the criticism.

“Anti-dumping duties are imposed after a process of thorough investigation,” Commerce Secretary Rahul Khullar told HT. “Initiating the process of inquiry does not hinder imports.”

He said even after final anti-dumping duties were imposed, they ended up affecting less than 1 per cent of the total trade.

But in the big picture, as China-India relations go, all’s good, analysts say. In October last, the commerce departments of both the countries set up an expert group to promote cooperation.

“Any nuance in India-China relations should be looked through the nuance of security and history,” said Samir Saran, vice president of the Delhi-based think-tank Observer Research Foundation.

(with inputs from Meher Ali)

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