The Business Inside: Indian Govt To Cut Import Dependency, Focussing On Local Production

The tension between India and China doesn’t seem to end. The recent Galawan Valley incident triggered #BoycottChineseProducts fire in almost every state of the country. As the world economy is already critical, China doesn’t seem to stop its underhanded and unethical tactics. Up until now, India has been one of the biggest trading partners of China. But because of the recent incidents, the Indian Govt will be taking some sever actions.


According to reports, the Indian Government is planning a sectoral strategy to decrease import dependency on Chinese products. Building local capacity, creating supply & value chains, and becoming self-dependent in at least half industrial areas ranging from furniture and footwear to medical equipment and textiles to defense production and electronics, multiple paradigms added to the agenda.

All the sectors included will receive tariff protection and fiscal incentives credit support to compete against the influx of cheaper imports, especially from China. One of the people working under economic ministry said, “Every custom duty exemptions will be thoroughly reviewed and taken down as most of them are negatively impacting domestic manufacturing. People can expect the changes by the end of this quarter [FY-2021].”

What’s Next?

Every industrial area is being monitored carefully according to the availability of skilled workers and supply chains to create future employment opportunities. In the times when the country is battling against subsequent lockdown and coronavirus epidemic, Indian PM Narendra Modi talked about his vision about Self-Reliant India (Atmanirbhar Bharat). As things are right now, economic contraction is likely to occur in this financial year.

It took a military faceoff in the Galwan Valley in eastern Ladakh to realize the concerns regarding trade deficit size with China. Right now, the benefit of trade balance between Indian and China is in the latter’s favor. According to trade figures disclosed by GACC (General Administration of Customs of China), in 2019, the trade deficit between India and China was $56.77 billion. And the bilateral trade was about $92.68 billion in the year.

The trade relation between Beijing and New Delhi has taken a negative turn after the People Liberation Army of China attacked the Indian Army unethically in the Galwan Valley on 15 June, killing 20 Indian Army personnel in the gruesome encounter. This out-of-the-blue Chinese invasion lit-up the fire of Boycott of Chinese Goods in India.

A person from the authorities clarified that “govt is working on its strategies by keeping in mind Atamanirbhar Bharat Abhiyan (Self-reliant India Initiative) and Make in India policy. We must not consider it as an outer maths of the Chinese wrong-doings at the border.” 

Watch the video to know about Self-Reliant India Mission

Indian Finance Minister also mentioned in her budget speech that recent Chinese aggression might be due to their policy to reduce import of ‘Made in China‘ goods in the country. However, it will also help govt to achieve the objective of self-reliant India. On 1 February 2020, when finance minister Nirmala Sitharaman presented the Union Budget, she mentioned that “the import of the unhindered goods that fall under FTAs (Free Trade Agreements) were troubling domestic businesses and industries like MSMEs. So, there’s a need to implement stringent checks on such imports.”

Indian Govt. also plans to persuade big industries to use locally manufactured raw materials like steel, iron, etc.. Various developed nations are already following this policy, where Indian MNCs are running automobile companies. Now, the Indian govt is talking with the automakers to use locally purchased steel for building auto parts.

A person working in the steel ministry said, “We are taking measures to control dumping of steel and products manufactured by it that fulfill quality guidelines.” The Ministry has also issued an authoritative instruction for state-run firms, instructing them to utilize domestically manufactured steel and iron products. Although the sectoral strategy is the right decision, there are still some parameters that govt need to focus on to become self-reliant. The best way is by calibrating import curbs to avoid any supply disruption in the country.

The chairman of TPCI (Trade Promotion Council of India) said, “Sector strategy is a perfect chance to decrease dependency on foreign goods. India needs to consider sector-based clusters on a plug and play model.” 

Professor of Delhi School of Economics, Mr. Ram Singh said, “India has what it needs to become self-reliant, but there are still some sectors where production is highly dependent on Chinese imports.”

President of Ph.D. Chamber of Commerce and Industry, Mr. DK Aggarwal said, “We will achieve the vision of an Atmanirbhar Bharat in the coming years. Further enhancement should be done to improve the cost-competitiveness of Indian Businesses by reducing imports in a phased strategy.”

3 thoughts on “The Business Inside: Indian Govt To Cut Import Dependency, Focussing On Local Production

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s