As border tensions between India and China continue, policy makers in New Delhi maintain that the country is working on a multi-pronged strategy to reduce India’s dependence in Chinese imports and improve capability of the domestic manufacturing sector.

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Meanwhile, some government departments have either cancelled or are planning against using Chinese companies’ services. China accounts for 14 percent of India’s imports and is a major source for goods like mobile phones, telecom equipment, plastic toys and critical pharmaceutical ingredients.

According to people aware of the developments, one of the primary strategies under consideration to restrict low quality Chinese imports is to prepare technical regulations that specify minimum product related standards. CNBC-TV18 had reported about the Ministry of Commerce and Industry identifying 371 non-essential goods on which quality control orders will be issued.

According to government estimates, India imported nearly $127 billion worth of these products spread across sectors like steel, consumer electronics, telecom equipment, chemicals, cutlery and rubber articles.

This strategy, however, does not specifically target China and the quality control orders will be applicable to all imported and domestically-produced goods. "A large chunk of the 371 products are imported from China. When quality norms are imposed it will not only stop low-grade Chinese imports but at the same time ensure that made in India products are of global quality and hence can be pitched to buyers in international markets," said an official involved with the exercise.

The second strategy is to pitch India as a destination to global companies that are seeking to set up alternate global supply chains outside of China. CNBC-TV18 had reported how Invest India—a government-industry joint venture—is reaching out to more than 1,000 companies to convince them to set up factories and facilities in the country.

Moreover, the cabinet recently approved a proposal to set up project development cells in select ministries, which will prepare blueprint of investible projects that will be pitched to prospective foreign investors.

The third strategy relates to sops for specific industries. As a part of this plan, India recently announced a production-linked incentive scheme for medical products as well as electronic goods. According to sources, New Delhi plans to scale up the incentive regime.

The union cabinet headed by Prime Minister Narendra Modi recently gave its nod to set up an empowered group of secretaries—a panel of senior government officers—that will recommend sectoral incentives for domestic and foreign companies.

The fourth strategy under consideration is to hike customs duties. While discussions on the proposal is on, officials maintained that duty hike may not be a sustainable way of promoting the government's Make in India initiative and, as a consequence, customs duties will be increased only after detailed parleys.

Lastly, the government is working on a phased manufacturing programme which seeks to make India a global hub for 12 sectors that include air conditioners, furniture, toys, chemicals, ready-to-eat food products, man-made fibres, capital goods, pharmaceuticals and auto components.

Industry bodies like the Confederation of Indian Industry (CII), Associated Chambers of Commerce and Industry of India (Assocham), and Federation of Indian Chambers of Commerce & Industry (FICCI) have already given their inputs to the government on the programme.

First Published:Jun 18, 2020 5:19 PM IST