A report by the Confederation of Indian Industry
has pointed out that since 2012, China’s exports have increasingly moved up the value chain, with accelerated growth in high-technology items, such as telecommunications equipment, automotive, cellphones, etc.
With the rest of the world carved up by trade deals and the Chinese market
slowly opening up, shipment of manufactured goods to India’s northern neighbour remains a top priority for New Delhi.
is a state enterprise-driven economy and most imports continue to be ordered by state companies. Issues of market access, primarily in agri commodities and pharma products, continue to remain. These have to be addressed first,” Ajay Sahai, director general of the Federation of Indian Export Organisations, said.
Shipments of high value machinery items to China had seen an uptick in 2017-18, jumping by more than 34 per cent before growth rate halved a year later. Little of the $81.02 billion of India’s engineering exports in 2018-19 reached China. Exporters blame this on state-owned enterprises, effectively rejecting Indian firms once they participate in tenders.
“The tender specifications themselves are exceedingly strenuous and mandate local registration for Indian firms and in some cases, significant criminal liability for not honouring the contract. The issue is that authorities act arbitrarily, often suspending shipments midway into the contract period, citing the exporter hasn’t complied with new product standards that have just been announced,” Pankaj Mahtani, head of product sales at Premier Engineering, a Pune-based midsized export firm, says.
The government has placed its biggest bet on pharmaceuticals for reducing the mega $53.6 billion trade deficit with China. Despite several rounds of bilateral talks, access to the lucrative market remains transitory for Indian firms. Industry estimates suggest over 240 applications of Indian pharmaceutical exporters are currently pending with China.
“India is one of the largest manufacturers of generic drugs. While Indian pharmaceutical companies export generic drugs to the US and Europe, as most of the drugs have received the US Food and Drug Administration and European Union approval, the difficulty for Indian pharmaceutical exports arises from the complicated regulatory approvals process in China,” D K Aggarwal, president of the PHD Chamber of Commerce & Industry, said.
Thus, Indian pharmaceutical firms face regulatory hurdles and prolonged and unpredictable timelines for drug registration in China. Often, they are asked to submit detailed clinical trial data and reveal the drug formulation process at the time of registration, he added.
Despite suffering from a lack of cheap lifesaving drugs, the country has refused to relax management on imported generic medicine. People who want to import generic drugs for profit still have to follow Chinese laws to register and get an approval in advance.
“China has been very effectively using non-tariff barriers to curb imports that it wants to avoid. On the other hand, it also uses these restrictions as a political tool to control bilateral relations,” senior trade policy expert and professor at Jawaharlal Nehru University, Biswajit Dhar, said.
The World Trade Organization estimates that India’s average rate of tariff stands at 13.8 percent, one of the highest for any major economy. On the other hand, the average rate of import duty for China stood at 5 per cent before Beijing’s long and costly trade war with the Donald Trump-led US government.
“It has been repeatedly seen that countries with lower import tariffs repeatedly deploy non-tariff barriers to control imports. What matters is how long they can hold on to them, given that global trade growth is going down. We will continue to talk to China till then,” a senior commerce department official, said.