Ban on China imports: Possible spike in dumping a concern
An investigation has already confirmed dumping of Chinese polyethylene terephthalate (PET), a raw material to manufacture bottles for packaging of food and beverages, after the US, Canada, Brazil and Argentina restricted its imports from China.Updated: Aug 11, 2020 02:18 IST
India is on alert against a possible increase in the dumping of Chinese products, either directly or through third countries, in the Indian market as major economies move to impose restrictions on Chinese imports, two officials aware of the matter said on condition of anonymity.
An investigation has already confirmed dumping of Chinese polyethylene terephthalate (PET), a raw material to manufacture bottles for packaging of food and beverages, after the US, Canada, Brazil and Argentina restricted its imports from China.
The finance ministry will take appropriate remedial actions soon based on a final investigation report, the officials cited above, who work in two different economic ministries, said.
Another cause of concern is a recent executive order by US President Donald Trump directing the federal government to purchase essential drugs from only American manufacturers. The move could block a major market for Chinese drug manufacturers and prompt them to push their products into the Indian market, they said.
“As the government agencies as well as the domestic industry are vigilant, adoption of any illegal means by Chinese firms to access Indian market would be foiled,” one of the officials said.
There is no blanket ban on Chinese imports, provided Beijing follows rules, does not engage in dumping to hurt Indian industries, and does not pose a threat to India’s national security. “All critical items are still imported [from China]. Actions are initiated against only those Chinese products that hurt domestic companies. It is the duty of the government to protect Indian businesses,” the first official said.
He cited the example of PET resin being domped from China. “It is hurting domestic firms such as RIL [Reliance Industries Ltd]. On the basis of a complaint from the industry, DGTR (Directorate General of Trade Remedies) investigated the matter and its preliminary report found dumping by the Chinese firms,” a second official said. The preliminary investigation report of DGTR, issued on August 5, confirmed the development.
Proposing to impose an anti-dumping duty on import of Chinese PET resin, DGTR said on Wednesday: “Information provided by the petitioners shows that trade remedial measures have been invoked by USA, Canada, Brazil and Argentina against Chinese imports of subject goods [PET resin] show the pattern of dumping by the concerned producers/exporters of the subject country [China]. The petitioners have emphasized that the closure of these markets to the exporters indicates threat of increased dumping and further injury to the domestic industry.”
Officials said a similar situation may emerge for the Indian pharmaceutical sector after President Trump’s executive order. “Over the course of the next four years, we will bring our pharmaceutical and medical supply chains home and we will end reliance on China and other foreign nations,” a PTI report from Washington said on Friday. quoting Trump.
China and India are twoof the world’s biggest pharmaceutical exporters. While China has a near monopoly in active pharmaceutical ingredients (APIs), India is the largest exporter of generic medicines, the second official said. “The US market will squeeze and Indian pharmaceutical manufacturers will face stiff competition from Chinese products in almost all markets. The government’s effort to revive domestic API manufacturing may also get affected by influx of cheaper Chinese products,” he added.
Divakar Vijayasarathy, founder and managing partner of consulting firm DVS Advisors LLP, said: “India has always been the dumping ground for Chinese products. With America restricting imports from China, more things could be dumped in India. India has always been using both tariff-based and non-tariff based approach to limit the dumping of Chinese goods but often in vain.”
“Improving the cost- effective domestic manufacturing capabilities, establishing an integrated value-added supply chain and more importantly favourable regulatory regimes are solutions for fostering domestic manufacturing in the long run,” he added.
He said more and more countries are reducing their import dependence on China either by encouraging domestic manufacturing like India through the Atmnirbhar Bharat Abhiyan (Self-Reliant India Initiative) or through an outright ban on imports like the America First policy of Trump.
Deepak Sood secretary general of the Associated Chambers of Commerce and Industry (Assocham) said: “When it comes to pharmaceuticals, our critical imports from China relate to APIs. The Indian government has come up with several effective measures to boost self-reliance in these crucial areas as well. For the rest of pharma products, our domestic industry can compete with the Chinese within and outside India. Even for APIs, we expect to soon catch up.”