|
Measurers against Chinese dumping of goods |
 |
India and China have been caught in a diplomatic showdown over the dumping of Chinese consumer goods into Indian markets which has raised cries of ban from many small industries and the Government has proposed a series of measures to respond to the call.
Joining the issue, the Chinese Ambassador to India, Mr. Zhou Gang alleged that a campaign had been waged against Chinese products by India. Gang, whose interview appeared in a major business daily ins New Delhi on Nov. 30, said that he would take up the issue with the Indian Government.
Reacting to the interview, an External Affairs Ministry spokesman said, India has made no moves to "boycott" Chinese goods. However, he said, India would take anti-dumping action on goods that did not conform to multilateral trade agreements, including those of the World Trade Organisation. He claimed that consumer goods from many countries, including China, are often brought through "third party" channels and goods without price tags attached would invite action u under existing laws in India.
The Chinese Commercial Counsellor to India, Mr. Du Chengping, said his country has initiated anti-dumping measures against companies indulging in such practices. He emphasised that China was against dumping, but added that it was also the duty of India to check dumping.
Meanwhile, speaking in a different context, the Defence Minister, Mr. George Fernandes recognized the progress made by China in all fields which, he said, poses the greatest challenge to India in its e endeavours to lead the world in the new millennium. Reacting to his remarks, Chinese Foreign Ministry spokesman said, "China's development does not constitute any threat to any country, including India. We are confident that India's development, similarly, does not constitute a threat to China".
In initiating action, the government seems to have finally accepted arguments for greater protection of Indian industry from the flooding of cheap but poor quality Chinese products. The Government has launched a fresh round of anti-dumping investigations and set up a strategic management group headed by Mr Brajesh Mishra which will recommend higher levels of import duties than those existing now. There is also an attempt to introduce non-tariff barriers through insisting on maximum retail prices and registration with the Bureau of Indian Standards. As with many NTBs, such measures sound reasonable, but can be used for protection.
After furious lobbying by the domestic industry, the Government has ordered that 131 items imported into this country must carry, first, Bureau of Indian Standards certification and, second, information on maximum rupee retail prices.
There is also talk of anti-dumping investigations and cracking down on under invoicing of good sand smuggling. Arguing that clauses in the India-Nepal trade agreement unable the diversion of goods to the Indian market, industry is pressing for a review of that treaty. Nothing is being left to chance. Mumbai even witnessed raids on shops this week. No illegal goods turned up by the action is being seen as a message to retailers to be wary of stocking anything Chinese.
The Indian industry is paranoid about Chinese imports and the government finally seems to be taking cognizance.
Official imports from China are, of course, less than $750 million, but what is also true is that there are at least three routes for imports from China smuggling though the Indo-China border: smuggling through Central Asia and smuggling (or legitimate trade) through Nepal and Bangladesh. From batteries to consumer electronics to stuffed toys, the Chinese are everywhere. Not only are Chinese products cheaper, they are often of better quality than corresponding Indian products. The price differential is anything from one-tenth to one-fifth. Two factors complicate the picture. First, industry faces slowdown, and problems that should be described to the downturn are ascribed to Chinese imports. Second, many of these consumer goods categories are items reserved for the small-scale sector. Industry has argued that Chinese have an unfair playing field. Labour laws are more flexible there, infrastructure is better and cheaper and the Chinese use non-transparent export subsidies. These are valid arguments. However, China is on its way towards becoming a member of the World Trade Organization and once this happens, un- warranted cross subsidization of exports will cease. Economic observers ask, will Indian industry then be in a position to compete? Given Chinese upgradation of quality, productivity levels and economies of scale, the answer is in the negative.
Observers say, it is illogical to expect that Chinese imports can legally be prohibited. Even if this is attempted, arbitrage will take place because of low import duties in Nepal and Bangladesh, and it is impossible to monitor this even if one has requirements on local content and rules of origin. It is high time Indian industry recognized that there can be no permanent protection. There is no alternative to satisfying consumers through higher productivity and better quality. Blocking Chinese goods is certainly not in the interest of the stoic Indian consumer. There is no good reason to deny consumers products which anecdotal evidence shows are generally well-designed and well-made and priced on average 20 to 30 per cent below domestic equivalents. They keep costs down by being labour-intensive and they add value by using technologies, product designs, market information, management techniques that come along with or are embedded in the foreign investment in their enterprises.
|
